Before the Court en banc. Opinion by Justice Hardesty.
This original petition for writ of mandamus arose out of district court litigation pertaining to a fatal automobile accident at a construction site in Las Vegas. Otak Nevada, LLC (“Otak”) was the architect on the project; Real Parties in Interest Cheyenne Apartments, PPG, LP, Pacificap Holdings XXIX, LLC, Pacificap Properties Group, LLC, and Chad Rennaker and Jason Rennaker (collectively, “Owners”) were the owners and developers, and Pacificap Construction Services, LLC (the “Contractor”) was the general contractor. Otak entered into an agreement with the Owners to design a multifamily housing project, then subcontracted with an engineering firm to design traffic medians and replace traffic markers near the construction site. The accident occurred because one of the medians was not installed and the traffic markers were not replaced. The plaintiffs eventually agreed to settle their claims against Otak for $210,000.00, after which Otak filed a motion to approve a good-faith settlement. The district court granted the motion and rejected the Owners’ and Contractor’s arguments that the settlement would unfairly shift Otak’s liability to them, and that the proposed amount of the settlement was less than Otak’s potential liability or its insurance policy limits. Thereafter, the court granted the Owners leave to file a third party complaint against Otak, which Otak moved to dismiss on the grounds that all proposed claims were barred by NRS 17.245. Otak filed its writ petition after the district court denied Otak’s motion to dismiss.
The Court first determined that the evidence in the record demonstrated that Otak’s liability was minimal: Otak was not contractually required to visit the site to report unsafe conditions, nor was it contractually responsible for safety programs or precautions. Moreover, Otak did not breach any duties that it owed to any of the parties, and it was not involved in, or responsible for, the road construction that resulted in the accident. The Court also noted that insurance policy limits are not “exclusive criteria in determining whether a settlement is in good faith,” and the fact that a settlement may eliminate third party liability does not mean that the settlement was made in bad faith. Therefore, the district court did not abuse its discretion by granting Otak’s motion for approval of good-faith settlement.
Next, the Court examined NRS 17.245(1)(b), which “discharges the tortfeasor to whom [a release from liability] is given from all liability for contribution and for equitable indemnity to any other tortfeasor.” The Court noted that the statute “does not state whether ‘contribution’ [an equitable sharing of liability] or ‘equitable indemnity [a complete shift of liability to the party that is primarily responsible] only include claims titled as such, or whether NRS 17.245(1)(b)’s bar encompasses all theories of recovery that seek contribution or equitable indemnity, regardless of the claim’s actual title.” In holding that the statute requires that latter, the Court first noted that the purpose of the Uniform Contribution Act Among Tortfeasors was to “permit plaintiffs to sever a joint tortfeasor from the case without needing to first reach a global settlement with all of the defendants.” Next, the Court observed that the Nevada Legislature amended NRS 17.245 in 1997; prior to that time, the statute barred a non-settling defendant from seeking contribution from a settling defendant, but permitted claims for equitable indemnity. The legislative history revealed that the amendment was made “to eliminate [equitable indemnity as a] defense and promote and encourage settlements among joint defendants.” Thus, the Court concluded that after a defendant has settled in good faith, 17.245(1)(b) bars all claims that seek contribution or equitable indemnity damages from that defendant, regardless of how those claims are titled. The Court also held that because NRS 17.245(1)(b) does not distinguish between equitable and contractual contribution claims, all contribution claims are barred by the approval of a good-faith settlement.
In determining whether a claim seeks contribution or equitable indemnity, district courts should consider whether “(1) the claim arose from the same basis on which the settling defendant would be liable to the plaintiff, and (2) the claim seeks damages comparable to those recoverable in contribution or indemnity actions.” In light of this standard, the Court concluded that the Owners’ claim for express (contractual) indemnity was actually a claim for contribution, because the contractual provision at issue apportioned liability according to fault rather than shifting liability to the party that was primarily responsible for damages. Therefore, the Owners could not prevail on this claim. Likewise, because the Owners did not seek any damages from Otak that were unrelated to the accident, nor did the Owners allege that Otak breached any duties to them “on a basis other than that Otak was potentially responsible for the plaintiffs’ accident,” its contract-based claims were actually claims for contribution. Those claims were also barred by the statute. Petition granted. (Patrick Murch, Associate in the Las Vegas office of McDonald Carano Wilson).
