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CAPRIATI CONSTR. CORP., INC. VS. YAHYAVI C/W 80821

Court: Nevada Supreme Court
Date filed: 2021-11-10
Citations: 2021 NV 69
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                                                  137 Nev., Advance Opinion 4,1
                        IN THE SUPREME COURT OF THE STATE OF NEVADA


                CAPRIATI CONSTRUCTION CORP.,                            No. 80107
                INC., A NEVADA CORPORATION,
                Appellant,
                vs.
                BAHRAM YAHYAVI, AN INDIVIDUAL,
                Respondent.

                CAPRIATI CONSTRUCTION CORP.,                            No. 80821
                INC., A NEVADA CORPORATION,
                Appellant,
                vs.                                                     FILED
                BAHRAM YAHYAVI, AN INDIVIDUAL,
                Respondent.                                             NOV 1 0 2021

                                                                   BY
                                                                         IEF DEPUTY CLERK

                            Consolidated appeals from a final district court judgment
                pursuant to a jury verdict and a post-judgment order awarding attorney
                fees in a tort action. Eighth Judicial District Court, Clark County; Ronald
                J. Israel, Judge.
                            Affirmed.


                Hutchison & Steffen, PLLC, and Michael K. Wall, Las Vegas; Law Offices
                of Eric R. Larsen and Eric R. Larsen, Las Vegas; Wilson, Elser, Moskowitz,
                Edelman & Dicker, LLP, and David S. Kahn and Mark Severino, Las Vegas,
                for Appellant.

                Prince Law Group and Dennis M. Prince and Kevin T. Strong, Las Vegas,
                for Respondent.




                BEFORE THE SUPREME COURT, EN BANC.

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                                                 OPINION

                By the Court, PARRAGUIRRE, J.:
                            In this opinion, we clarify two points of law. First, evidence of
                a defendanes liability insurance is admissible under NRS 48.135(2) if the
                defendant first introduces evidence suggesting its inability to pay a
                judgment. Second, a plaintiff represented on a contingency-fee basis may
                recover the entirety of the contingency fee as post-offer attorney fees under
                NRCP 68. As the district court adhered to this law when rendering its
                decisions, we discern no error from these proceedings and affirm.
                                 FACTS AND PROCEDURAL HISTORY
                            An employee of appellant Capriati Construction Corp., Inc.,
                drove a forklift into a street travel lane and collided with respondent
                Bahram Yahyavi's vehicle, resulting in injury to Yahyavi. Yahyavi brought
                an action against Capriati alleging negligence, and in its answer, Capriati
                denied liability. Capriati then filed a petition for bankruptcy. Following
                the conclusion of Capriati's bankruptcy proceedings, the negligence case
                proceeded to trial. Prior to trial, Yahyavi served Capriati with an offer of
                judgment for $4 million, pursuant to NRCP 68, which Capriati rejected. In
                his opening statement at trial, Yahyavi told the jury that Capriati had
                discarded the forklift operator's employment file. Capriati did not object.
                Yahyavi called the forklift operator as a witness, who admitted fault.
                Because of conflicting schedules, two of Capriati's experts also testified
                during Yahyavi's case in chief. They explained that Yahyavi's damages
                were exaggerated.
                            After Yahyavi rested his case, Capriati elicited testimony that
                its business had filed for reorganization. Yahyavi objected and moved for
                sanctions on the ground that his recovery would be prejudiced by Capriati's

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                  intentional elicitation of inadmissible evidence suggesting to the jury that
                  it was unable to pay a judgment. Capriati asserted that it was rebutting
                  Yahyavi's allegations of spoliation. The district court agreed with Yahyavi
                  and, as relevant here, (1) struck Capriati's answer as to liability and
                  disallowed its remaining witnesses to testify, and (2) instructed the jury
                  that Capriati had liability insurance to satisfy any verdict. The jury
                  returned a $5.9 million verdict in favor of Yahyavi.
                              After trial, Yahyavi moved for $2.3 million in attorney fees—his
                  contingency fee—under NRCP 68 on the ground that the jury's verdict of
                  $5.9 million exceeded the $4 million offer ofjudgment that Capriati rejected
                  nine months before trial. The district court weighed the appropriate factors
                  and awarded Yahyavi $2.3 million in attorney fees.
                              Capriati appeals, arguing that the district court erroneously
                  (1) imposed case-concluding sanctions, (2) instructed the jury that it could
                  consider Capriati's liability insurance, and (3) awarded Yahyavi attorney
                  fees that were incurred before the offer of judgment was rejected.
                                                DISCUSSION
                  Sanctions
                              Capriati argues that the district court erroneously imposed
                  case-concluding sanctions by striking its additional witnesses. It adds that
                  this constituted an unduly harsh sanction because it barred Capriati from
                  showing the jury evidence that Yahyavi's damages were exaggerated.
                  However, Capriati concedes that striking its answer as to liability was
                  supported by substantial evidence because its employee admitted fault at
                  trial.
                              We review a district court's sanctions order for an abuse of
                  discretion. MEI-GSR Holdings, LLC v. Pepperrnill Casinos, Inc., 134 Nev.
                  235, 242, 416 P.3d 249, 256 (2018). We employ "a somewhat heightened
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                       standard of review for case-concluding sanctions." Id. (internal quotation
                       marks omitted). Noncase-concluding sanctions, however, include those
                       after which a party is still able "to defend on the amount of damages."
                       Valley Health Sys., LLC v. Estate of Doe, 134 Nev. 634, 639, 427 P.3d 1021,
                       1027 (2018). We uphold noncase-concluding sanctions if substantial
                       evidence supports the district court's sanction order. Id. "Substantial
                       evidence is that which a reasonable mind could find adequate to support a
                       conclusion." Kolnik v. Nev. Emp't Sec. Dep't, 112 Nev. 11, 16, 908 P.2d 726,
                       729 (1996).
                                     The district court struck Capriati's answer as to liability.
                       Because Capriati's employee admitted fault, the district court concluded
                       that striking Capriati's answer as to liability alone would serve as a nominal
                       sanction. Thus, the district court also struck Capriati's additional
                       witnesses. Although Capriati argues that this was a case-concluding
                       sanction, we disagree because it was still allowed to defend on the amount
                       of damages. Specifically, Capriati presented testimony from two witnesses
                       to show that Yahyavi's damages were exaggerated. Moreover, Capriati
                       commented on Yahyavi's damages in its closing argument. Thus, we are
                       unpersuaded that striking Capriati's additional witnesses amounted to a
                       case-concluding sanction.
                                     We further conclude that substantial evidence supported the
                       district court's decision to strike Capriati's additional witnesses. The record
                       shows that Capriati intentionally elicited inadmissible testimony
                       describing its bankruptcy.     See RPC 3.4(e) (providing that a lawyer's
                       allusion to any matter unsupported by admissible evidence is misconduct);
                       see also Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)
                       (explaining "that the financial standing of the defendant is inadmissible as

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                evidence [to] determin[e] . . . compensatory damages"). Moreover, the
                record supports the district court's conclusion that striking Capriati's
                answer as to liability alone would serve as a nominal sanction because
                Capriati's employee admitted fault.         Because substantial evidence
                supported the district coures sanctions order, it imposed sanctions within
                its discretion.'
                Jury instruction
                            Capriati argues that the district court erroneously instructed
                the jury, "ECapriati] has liability insurance to satisfy in whole or part any
                verdict you may reach in this case." It argues that this instruction was
                prejudicial because it informed the jury that it could reach any verdict,
                which violates NRS 48.135.2 Yahyavi argues that, once a defendant
                introduces evidence suggesting its inability to pay a judgment, NRS
                48.135(2) allows the plaintiff to introduce evidence of the defendant's
                liability insurance to cure any resulting prejudice.
                             We review the district coures "decision to admit or refuse jury
                instructions for an abuse of discretion." MEI-GSR Holdings, 134 Nev. at
                237, 416 P.3d at 253 (internal quotation marks omitted). We review

                       'Capriati adds that this sanction was also unduly harsh because it
                elicited evidence of its bankruptcy to rebut Yahyavi's allegations of
                spoliation. We reject this argument because Capriati could have objected
                to Yahyavi's opening statement, see NRS 47.040(1)(a), rather than eliciting
                inadmissible evidence regarding its bankruptcy. We further reject
                Capriati's unsupported argument that a lay juror would not understand
                that the term "reorganization" is synonymous with bankruptcy.
                      2Insofar as Capriati argues that this jury instruction was an improper
                sanction, we conclude that it was a proper curative instruction, given
                Capriati's misconduct. See BMW v. Roth, 127 Nev. 122, 133, 252 P.3d 649,
                656 (2011) (explaining that a curative instruction may be issued as a
                sanction).
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                    whether the instruction "accurately states Nevada law" de novo. Id. at 238,
                    416 P.3d at 253 (internal quotation marks omitted).
                                We have not addressed whether evidence of a defendant's
                    liability insurance is admissible under NRS 48.135(2) after the defendant
                    introduces evidence suggesting its inability to pay a judgment. We interpret
                    a statute consistently with its plain meaning. See Leven v. Frey, 123 Nev.
                    399, 403, 168 P.3d 712, 715 (2007). Turning to the statutory text,
                                      1. Evidence that a person was or was not
                                insured against liability is not admissible upon the
                                issue whether the person acted negligently or
                                otherwise wrongfully.
                                      2. This section does not require the exclusion
                                of evidence of insurance against liability when it is
                                relevant for another purpose, such as proof of
                                agency, ownership or control, or bias or prejudice of
                                a witness.
                    NRS 48.135. We have explained that NRS 48.135(2) "use[s] 'such as to
                    introduce a nonexclusive list." Bigpond v. State, 128 Nev. 108, 115 n.5, 270
                    P.3d 1244, 1248 n.5 (2012). Thus, under the plain meaning of NRS
                    48.135(2), evidence of liability insurance may be admissible in situations
                    other than those expressly listed in the statute.
                                Persuasive authorities lead us to conclude that evidence of a
                    defendanes liability insurance is admissible under NRS 48.135(2) if the
                    defendant first introduces evidence suggesting its inability to pay a
                    judgment. See Wheeler v. Murphy, 452 S.E.2d 416, 426 (W. Va. 1994)
                    ("[O]nce the defendant offers evidence of his financial status to influence
                    the jury . . . , then the plaintiff may rebut such evidence by introducing
                    proof of the defendanes liability insurance."); see also Younts v. Baldor Elec.
                    Co., Inc., 832 S.W.2d 832, 834 (Ark. 1992) (holding the same).


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                                Capriati first introduced evidence of its bankruptcy, thereby
                    suggesting that it was unable to pay a judgment in favor of Yahyavi. Thus,
                    to cure the resulting prejudice, the district court appropriately instructed
                    the jury that Capriati had liability insurance to satisfy any judgment. This
                    instruction accurately states Nevada law, and the district court therefore
                    acted within its discretion.3
                    Attorney fees
                                Capriati argues that the district court erroneously awarded
                    Yahyavi $2.3 million in attorney fees—the 40-percent contingency fee from
                    the $5.9 million verdict—after Capriati rejected a $4 million offer of
                    judgment nine months before trial. Capriati asserts that the plain meaning
                    of NRCP 68 requires the district court to analyze which fees were incurred
                    after the offer of judgment was rejected. It further argues that, when the
                    plaintiff is represented on a contingency basis, district courts should apply
                    the lodestar method to apportion NRCP 68 fees to those earned post-offer.
                    Yahyavi argues that Nevada precedent interpreting NRCP 68 allows a
                    party to collect the entire contingency fee as post-offer attorney fees because
                    the contingency fee does not vest until the plaintiff prevails.
                                This court "review [s] an award of attorney fees for an abuse of
                    discretion." Logan v. Abe, 131 Nev. 260, 266, 350 P.3d 1139, 1143 (2015).


                          3We  reject Capriati's argument that this instruction was erroneous
                    because it told jurors that Capriati's insurance could satisfy any verdict.
                    Although such language could be improper in other cases, the language
                    used here was warranted to cure the prejudicial effect of Capriati's
                    misconduct. We also reject Capriati's argument that this instruction was
                    improper under the collateral-source rule, which bars evidence showing
                    that an injured party received a collateral payment. See Khowy v.
                    Seastrand, 132 Nev. 520, 538, 377 P.3d 81, 93-94 (2016). Because Capriati
                    was the tortfeasor, this rule is inapplicable.
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In exercising that discretion, the district court must make findings under
the Beattie and Brunzell factors. See Beattie v. Thomas, 99 Nev. 579, 588-
89, 668 P.2d 268, 274 (1983); Brunzell v. Golden Gate Nat'l Bank, 85 Nev.
345, 349, 455 P.2d 31, 33 (1969). Under Beattie, the district court considers
            (1) whether the plaintiffs claim was brought in
            good faith; (2) whether the defendants offer of
            judgment was reasonable and in good faith in both
            its timing and amount; (3) whether the plaintiffs
            decision to reject the offer and proceed to trial
            was grossly unreasonable or in bad faith; and
            (4) whether the fees sought by the offeror are
            reasonable and justified in amount.
99 Nev. at 588-89, 668 P.2d at 274. Under Brunzell, the district court
considers
            (1) the qualities of the advocate: his ability, his
            training, education, experience, professional
            standing and skill; (2) the character of the work to
            be done: its difficulty, its intricacy, its importance,
            time and skill required, the responsibility imposed
            and the prominence and character of the parties
            where they affect the importance of the litigation;
            (3) the work actually performed by the lawyer: the
            skill, time and attention given to the work; (4) the
            result: whether the attorney was successful and
            what benefits were derived.
85 Nev. at 349, 455 P.2d at 33. Insofar as an attorney-fees award invokes
a question of law, we review it de novo. See In re Estate & Living Tr. of
Miller, 125 Nev. 550, 553, 216 P.3d 239, 241 (2009).
            Under NRCP 68(f)(1)(B), if an offeree rejects an offer of
judgment and fails to obtain a more favorable judgment, the offeree must
pay "reasonable attorney fees, if any be allowed, actually incurred by the
offeror from the time of the offer."       (Emphases added.) NRCP 68
"authorize[s] a party who makes an offer of judgment that is not improved



                                      8
                upon to recover the reasonable attorney fees and costs incurred after the
                offer of judgment was made." Logan, 131 Nev. at 265, 350 P.3d at 1142.
                            District courts may award NRCP 68 attorney fees based on a
                contingency-fee agreement without billing records so long as the party
                seeking fees satisfies the Beattie and Brunzell factors. O'Connell v. Wynn
                Las Vegas, LLC, 134 Nev. 550, 562, 429 P.3d 664, 673 (Ct. App. 2018).
                Consistent with NRCP 68's plain meaning, the court of appeals in O'Connell
                explained that NRCP 68 attorney fees based on a contingency-fee
                agreement must be limited to those fees earned post-offer." Id. However,
                O'Connell did not address whether a party may recover the entirety of the
                contingency fee as post-offer attorney fees. Id.
                            We now clarify that a district court may award the entire
                contingency fee as post-offer attorney fees under NRCP 68 because the
                contingency fee does not vest until the client prevails.4 See Grasch v.
                Grasch, 536 S.W.3d 191, 194 (Ky. 2017) (holding that "the attorney does not
                possess a vested right to the actual contingent fee itself until the case is won
                or settled"); see also Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 562
                (Tex. 2006) (holding the same). A contingency fee is contingent on the
                plaintiff prevailing, which will happen only after an offer of judgment is
                rejected—never before. Our holding is consistent with public policy
                justifications supporting contingency-fee agreements, see O'Connell, 134
                Nev. at 559-60, 429 P.3d at 671-72, as the contingency-fee-based award
                properly serves as a punishment for rejecting a reasonable offer of


                      4We reject Capriati's argument that the lodestar method is necessary
                to apportion an award of NRCP 68 attorney fees based on a contingency-fee
                agreement. See Shuette v. Beazer Homes Holdings Corp., 121 Nev. 837, 864,
                124 P.3d 530, 549 (2005) (explaining district courts are "not limited to one
                specific approach" in determining reasonable attorney fees).
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                  judgment, see MEI-GSR Holdings, 134 Nev. at 245, 416 P.3d at 258
                  (explaining that one purpose of NRCP 68 is to punish parties for not
                  accepting a reasonable offer ofjudgment). We reiterate that a party seeking
                  NRCP 68 attorney fees based on a contingency-fee agreement must still
                  satisfy the Beattie and Brunzell factors.
                              Based on our holding, the district court did not err by
                  concluding that Yahyavi was entitled to recover the entirety of his
                  contingency fee under NRCP 68. The district court methodically weighed
                  the Beattie and Brunzell factors and concluded that the attorney fees were
                  reasonable. Based on this record, we conclude that the district coures
                  application of the Beattie and Brunzell factors does not constitute an abuse
                  of discretion. Thus, we affirm the attorney-fees award.5
                                              CONCLUSION
                              Evidence of a defendant's liability insurance is admissible
                  under NRS 48.135(2) if the defendant first introduces evidence suggesting
                  its inability to pay a judgment. Moreover, a plaintiff represented on a
                  contingency-fee basis may recover the entirety of the contingency fee as
                  post-offer attorney fees under NRCP 68, so long as that party satisfies the
                  Beattie and Brunzell factors. We conclude that Capriati has presented no


                        5Insofar  as Capriati argues that the district court's application of the
                  Beattie and Brunzell factors constitutes an abuse of discretion, we decline
                  to address this argument because Capriati did not cite the record to support
                  any of its fact-based assertions, including those pertaining to whether its
                  decision to proceed to trial was in bad faith. See NRAP 28(a)(10)(A), Allianz
                  Ins. Co. v. Gagnon, 109 Nev. 990, 997, 860 P.2d 720, 725 (1993) ("This court
                  need not consider the contentions of an appellant where the appellanes
                  opening brief fails to cite to the record on appeal."). Thus, we cannot
                  conclude that the district court abused its discretion.

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                      meritorious claims of error. Likewise, Capriati has not shown that the
                      district court's sanctions order constitutes an abuse of discretion. Because
                      the district court correctly applied Nevada law, we affirm the final judgment
                      and attorney-fees order.6




                                                                                        1   J.
                                                            Parraguirre


                      We concur:


                         ZIA. ter-4.               , C.J.
                      Hardesty


                                                   ,   J




                                                   ,   J.
                      Silver




                                 district court also denied Capriati's motions for a new trial and
                               6The
                      to retax costs. In Capriati's notice of appeal, it states that Capriati is also
                      appealing these post-judgment orders. However, Capriati's briefs provided
                      no argument as to these motions, and therefore we affirm them. See
                      Edwards v. Emperor's Garden Rest., 122 Nev. 317, 330 n.38, 130 P.3d 1280,
                      1288 n.38 (2006) (stating that arguments unsupported by citations to
                      relevant authority need not be considered by this court).
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                                HERNDON, J., with whom STIGLICH and PICKERING, JJ.,
                    agree, concurring in part and dissenting in part:
                                I concur with the decision to affirm the district court's sanctions
                    order and jury instruction. I disagree, however, with the majority's
                    conclusion that the district court properly exercised its discretion in
                    awarding the entirety of the contingency fee under NRCP 68 in the manner
                    in which the district court did so in the underlying case.
                                As the majority recognizes, NRCP 68 provides for awards of
                    post-offer attorney fees only. Logan v. Abe, 131 Nev. 260, 265, 350 P.3d
                    1139, 1142 (2015). In determining whether awarding such fees is
                    appropriate, a district court must first consider the factors laid out in
                    Beattie u. Thomas, 99 Nev. 579, 588-89, 668 P.2d 268, 274 (1983), and
                    Brunzell v. Golden Gate National Bank, 85 Nev. 345, 349, 455 P.2d 31, 33
                    (1969). Gunderson u. D.R. Horton, Inc., 130 Nev. 67, 81, 319 P.3d 606, 615-
                    16 (2014). The fourth Beattie factor specifically requires the district court
                    to consider whether the attorney fees sought "are reasonable and justified
                    in amount." Beattie, 99 Nev. at 589, 668 P.2d at 274. Other jurisdictions
                    have concluded that a district court cannot determine the reasonableness of
                    attorney fees actually incurred post-offer based solely on a contingency-fee
                    agreement. Cooper v. Thompson, 353 P.3d 782, 798-99 (Alaska 2015); Ga.
                    Dep't of Corr. v. Couch, 759 S.E.2d 804, 815 (Ga. 2014); cf. Blanchard u.
                    Bergeron, 489 U.S. 87, 92-93 (1989) (concluding that a contingency-fee
                    agreement can be a factor in determining the reasonableness of an attorney-
                    fee award but is not singularly determinative).
                                The majority concludes that an award of the entirety of the
                    contingency fee is reasonable because a client who has agreed to a
                    contingency-fee agreement has not incurred any attorney fees until the

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                    judgment is entered, which occurs after the NRCP 68 offer. However, those
                    fees begin to be earned at the inception of the case, when the attorney's
                    representation of the client begins, and they continue to be earned
                    throughout the pendency of the case. They do not materialize only upon
                    entry of the judgment. Thus, while fees are not yet owed by the client at
                    the time of offer, they have clearly been accrued by the attorney. Indeed,
                    under the attorney's contingency-fee agreement with the client, if the
                    attorney is unsuccessful, the attorney alone is responsible for those fees.
                    See Couch, 759 S.E.2d at 817 (recognizing that there is a "common sense
                    understanding that attorneys are accruing reasonable fees as they work on
                    a case; they simply are not entitled to collect the amount of fees agreed to
                    under a contingency fee contract from their client until the conditions of the
                    contract have been 'nee).
                                This court has previously recognized that recoverable post-offer
                    fees are not limited to those incurred by the client. Logan v. Abe, 131 Nev.
                    260, 265-66, 350 P.3d 1139, 1142-43 (2015) ("Because the statute (1 [is]
                    limited to the costs incurred rather than the party who pays them, we
                    therefore hold that . . . NRCP 68 allow[s] a party to recover qualifying
                    attorney fees and costs that were paid on its behalf by a third party.").
                    Therefore, even if the client does not owe payment for his or her attorney
                    fees until judgment is entered, those fees have been accrued by the attorney,
                    and it is unreasonable to require the offeree party to be responsible for the
                    entirety of the contingency fee when NRCP 68 only permits recovery of fees
                    incurred "from the time of the offer." NRCP 68(f)(B).
                                Moreover, it would be unfair to require the offeree party to pay
                    the entirety of the contingency fee when the offeree was unaware of the
                    private contingency-fee agreement when he or she rejected the offer of

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