[00:00:21] Speaker 00:
May it please the court.

[00:00:23] Speaker 00:
My name is Sabrina Strong of the Melvinian Myers on behalf of plaintiff and appellant, the North River Insurance Company.

[00:00:30] Speaker 00:
I would like to reserve three minutes for rebuttal.

[00:00:34] Speaker 00:
This morning I intend to focus on three components of the arguments that are dispositive and require reversal of the decision below.

[00:00:42] Speaker 00:
To table set, the overarching question here is whether my client, North River,

[00:00:50] Speaker 00:
as an excess insurer can proceed on its equitable subrogation claim against a primary insurer here, James River, to recover the amount that it paid to settle a wrongful death claim on behalf of its insured after James River failed to settle within its $1 million primary policy limits.

[00:01:14] Speaker 00:
California law plainly authorizes that claim, but here

[00:01:19] Speaker 00:
the court below granted the motion to dismiss, relying on two related unpublished decisions from the Nevada Supreme Court, St.

[00:01:30] Speaker 00:
Paul and Aspen.

[00:01:32] Speaker 00:
And the court found that because the settlement was within the combined policy limits, the insured did not suffer any harm.

[00:01:39] Speaker 00:
And therefore, North River, my client, cannot step into its shoes

[00:01:44] Speaker 00:
to recover any amount it paid due to James River's breach of its duty to settle.

[00:01:51] Speaker 00:
First, I will address the threshold question, making it clear that there is no conflict of law here that would trigger a choice of law analysis and that California law should apply based on that ground alone.

[00:02:05] Speaker 00:
Second, even if St.

[00:02:07] Speaker 00:
Paul could be construed as creating a conflict of law,

[00:02:12] Speaker 00:
California law should still apply, because the California Supreme Court's choice of law analysis in Hurtado makes plain that Nevada has no interest in having the St.

[00:02:25] Speaker 00:
Paul rule applied in this dispute.

[00:02:29] Speaker 03:
And third- That's the primary reason why California law should apply.

[00:02:35] Speaker 00:
Your Honor, in the Hurtado case, California Supreme Court

[00:02:40] Speaker 00:
I think it's best that I talk about that case to give a sense of how to analyze the issue.

[00:02:45] Speaker 00:
In Hurtado, there was a car accident.

[00:02:50] Speaker 00:
The decedent was a Mexican resident.

[00:02:53] Speaker 00:
The family sued in California against a California defendant.

[00:02:58] Speaker 00:
The California defendant argued that Mexican law should apply because there was a limit to wrongful death damages according to Mexican law.

[00:03:07] Speaker 00:
The California Supreme Court said that rule limiting damages serves to benefit defendants.

[00:03:16] Speaker 00:
The defendant in that case was a California resident.

[00:03:20] Speaker 00:
Therefore, Mexico had no interest

[00:03:23] Speaker 00:
in having its law applied to the case, because it would benefit a defendant.

[00:03:28] Speaker 00:
The defendant was not the Mexican resident.

[00:03:30] Speaker 00:
It would not benefit the plaintiff, which was the Mexican resident.

[00:03:33] Speaker 00:
We have a similar issue here.

[00:03:34] Speaker 00:
Ms.

[00:03:34] Speaker 04:
Strong, can I ask, so here you have, I can see a clear interest that Nevada has.

[00:03:40] Speaker 04:
You have Nevada Limited Partnership, I think the Alhambra place, running a Nevada apartment complex, and the incident took place in Nevada, this homicide.

[00:03:52] Speaker 04:
Where does California have an interest in this?

[00:03:58] Speaker 00:
Well, first of all, it's the forum state.

[00:04:00] Speaker 00:
So it automatically has an interest on that ground.

[00:04:02] Speaker 00:
That's the default.

[00:04:03] Speaker 00:
But if you look at what's being addressed here, it's not the interests of the injured in Nevada.

[00:04:11] Speaker 00:
They've been addressed.

[00:04:12] Speaker 00:
They've been taken care of.

[00:04:14] Speaker 00:
And when we look at the interest of the insured, Alhambra Place, which, by the way, is on a policy with a California insured that has been affected, and California state law is important to protect

[00:04:28] Speaker 00:
all of the insurance on the policy.

[00:04:30] Speaker 04:
It's not simply about parties.

[00:04:31] Speaker 04:
But you're seeking for equitable subrogation to step into the shoes of Alhambra Place.

[00:04:38] Speaker 00:
Yes, Your Honor.

[00:04:39] Speaker 00:
That is what we have alleged.

[00:04:40] Speaker 04:
Which is a Nevada party.

[00:04:42] Speaker 04:
So I'm still a little puzzled where the California interest lies.

[00:04:46] Speaker 00:
The choice of law analysis is not limited to parties, Your Honor.

[00:04:49] Speaker 00:
You look more broadly than that.

[00:04:52] Speaker 00:
But the facts have not been alleged as to the relationship between LA Pacific Place and the Alhambra, the two insureds.

[00:05:03] Speaker 00:
The primary insured on the policy is the LA Pacific Center.

[00:05:07] Speaker 00:
That's the primary insured.

[00:05:08] Speaker 00:
And so, of course, there are California interested issue, which we can get to.

[00:05:12] Speaker 00:
The fact that $4 million of their excess policy, which has an aggregate limit, has been taken.

[00:05:18] Speaker 00:
It's no longer available to Alhambra Place.

[00:05:22] Speaker 00:
It's no longer available to LA Pacific Center, which is a California insured.

[00:05:26] Speaker 00:
It has been harmed.

[00:05:29] Speaker 00:
beyond the notion of whether or not they were out of pocket in the context of this particular settlement.

[00:05:35] Speaker 00:
So California has an interest.

[00:05:36] Speaker 00:
It's the forum state.

[00:05:37] Speaker 00:
California has an interest because of LA Pacific Center's role here.

[00:05:42] Speaker 00:
But regardless of that, if you look at Hurtado.

[00:05:44] Speaker 04:
Who is LA Pacific Center?

[00:05:45] Speaker 04:
What role do they have?

[00:05:46] Speaker 00:
They're the primary named insured on the policies for voltage.

[00:05:50] Speaker 00:
Do they own?

[00:05:51] Speaker 00:
Alhambra?

[00:05:52] Speaker 00:
Those facts are not developed in the record.

[00:05:54] Speaker 00:
The primary named insured is LA Pacific Center.

[00:05:57] Speaker 00:
And if you look at the policy, everything has to go through LA Pacific Center.

[00:06:01] Speaker 03:
They must have some connection to that.

[00:06:04] Speaker 00:
Right.

[00:06:04] Speaker 00:
And the record is not developed, Your Honor.

[00:06:07] Speaker 00:
But yes, the Alhambra place is additional named insured on the policy.

[00:06:11] Speaker 00:
There's properties that are in Nevada on the policy.

[00:06:14] Speaker 00:
But the primary named insurer, like I said, is LA Pacific Center.

[00:06:18] Speaker 00:
And everything under the policy, the right to cancel, premium discussions are all limited to LA Pacific Center.

[00:06:24] Speaker 00:
They don't belong or they're not in the rights of Alhambra Place or any other named insured on that policy.

[00:06:31] Speaker 00:
But I want to say that all of this is kind of to the side if you look at Hurtado.

[00:06:36] Speaker 00:
You've really got to look at Hurtado because the key there is

[00:06:40] Speaker 00:
does Nevada have an interest in having its law applied?

[00:06:44] Speaker 00:
Now, the only difference in Nevada law and California law would be if you recognize St.

[00:06:50] Speaker 00:
Paul.

[00:06:51] Speaker 00:
Without recognizing St.

[00:06:52] Speaker 00:
Paul, there is no difference of law.

[00:06:54] Speaker 00:
California should apply.

[00:06:55] Speaker 04:
Yeah, let's talk about that.

[00:06:56] Speaker 04:
So why is your main argument that because it's unpublished that there's no conflict?

[00:07:03] Speaker 00:
There are lots of reasons, and we can talk about it.

[00:07:06] Speaker 00:
Certainly, it's unpublished.

[00:07:08] Speaker 00:
But beyond that.

[00:07:09] Speaker 04:
It's persuasive under the Nevada rules.

[00:07:10] Speaker 00:
It can be persuasive if you find it to be persuasive, Your Honor.

[00:07:14] Speaker 00:
But you've got to go through that analysis.

[00:07:15] Speaker 00:
What James River says is, of course, we have to look at it.

[00:07:20] Speaker 00:
And of course, it's persuasive because it's what they said.

[00:07:23] Speaker 00:
It's what they said in an unpublished opinion.

[00:07:27] Speaker 00:
It is not binding precedent.

[00:07:30] Speaker 00:
And if you actually look at it,

[00:07:33] Speaker 00:
Does it have to be binding precedent?

[00:07:35] Speaker 04:
I mean, Aspen specialty cited to St.

[00:07:39] Speaker 04:
Paul River.

[00:07:40] Speaker 04:
So it's citing to an unpublished decision of its own court.

[00:07:45] Speaker 00:
All right.

[00:07:45] Speaker 00:
So you've got to look at the analysis of the case.

[00:07:48] Speaker 00:
And if you look at the dissent that was authored by Justice Kadesh, it says the majority got, quote, basic precepts of segregation wrong.

[00:07:57] Speaker 00:
And I want to talk about what the basic precept of segregation is that the majority got wrong.

[00:08:02] Speaker 00:
The majority opinion there found that because the insured's liability was paid by the insurers,

[00:08:08] Speaker 00:
within their combined policy limits, the insurer did not have any damages.

[00:08:12] Speaker 00:
And as Justice Kadesh correctly pointed out in the dissent, that finding, and I quote, misapplies a fundamental presupposition of segregation that the insurer's payment reflects the subregor's insured's loss.

[00:08:28] Speaker 00:
And in making this point, Justice Kadesh cited the Nevada, its own published opinion, the Nevada Supreme Court's published opinion, and there,

[00:08:37] Speaker 00:
It points out that the rationale of St.

[00:08:40] Speaker 00:
Paul is directly at odds with published Nevada Supreme Court law.

[00:08:45] Speaker 00:
In Arguello, which is a 2011 Nevada Supreme Court opinion, it says, an insurer that pays its insured in full for claimed losses is subrogated by operation of law to the rights, if any, which the insured may have had against the tortfeasor, here the tortfeasor is James River, before payment was made.

[00:09:06] Speaker 00:
So if the St.

[00:09:08] Speaker 00:
Paul's, that's directly at odds with what St.

[00:09:10] Speaker 00:
Paul found.

[00:09:11] Speaker 04:
But I guess my, can I, I'm sorry to interrupt, but you know you're citing to the dissenting justice in St.

[00:09:18] Speaker 04:
Paul fire.

[00:09:19] Speaker 04:
And the key line that I read from St.

[00:09:21] Speaker 04:
Paul is, because settlement was within policy limits, the insurer did not suffer damages to subrogate.

[00:09:28] Speaker 04:
And that opinion, by the majority, holds over two decisions.

[00:09:35] Speaker 04:
Aren't we supposed to predict what the Nevada Supreme Court would do?

[00:09:39] Speaker 04:
And isn't this equitable subrogation claim directly on all fours?

[00:09:43] Speaker 00:
No.

[00:09:44] Speaker 00:
It's not on all fours.

[00:09:46] Speaker 00:
First of all, St.

[00:09:47] Speaker 00:
Paul was excess versus excess.

[00:09:49] Speaker 00:
This is excess versus primary.

[00:09:51] Speaker 04:
But Aspen was, though.

[00:09:52] Speaker 04:
That was excess and primary.

[00:09:53] Speaker 00:
And Aspen had no choice but to follow the rationale of St.

[00:09:57] Speaker 00:
Paul because it was in the related case.

[00:09:59] Speaker 00:
It's an exception to an unpublished opinion.

[00:10:01] Speaker 00:
It didn't have to go through the same analysis.

[00:10:03] Speaker 00:
It was bound by the rationale.

[00:10:05] Speaker 00:
But the rationale in St.

[00:10:06] Speaker 00:
Paul is wrong.

[00:10:07] Speaker 04:
Did it say that, that it was bound by St.

[00:10:09] Speaker 00:
Paul?

[00:10:09] Speaker 00:
It says it was compelling.

[00:10:11] Speaker 00:
And if you look at the rule of appellate procedure in Nevada, rule number 36, it says that there's an exception to unpublished opinions in the same or related case.

[00:10:21] Speaker 00:
they are binding law of the case.

[00:10:22] Speaker 04:
Right, right, right.

[00:10:23] Speaker 04:
There's an exception if it's binding, but did St.

[00:10:26] Speaker 04:
Paul determine that... I'm sorry, did Aspen determine that St.

[00:10:30] Speaker 00:
Paul was binding on... I believe there was language in it and it was compelled to find as it did based on the ruling of St.

[00:10:37] Speaker 00:
Paul, Your Honor.

[00:10:37] Speaker 00:
But again, you've got to look at... When you're saying that I'm citing to a dissent, what I'm telling you is the dissent is citing to published Nevada Supreme Court decisions

[00:10:47] Speaker 00:
And I just articulated the rationale.

[00:10:49] Speaker 04:
In Arguello, was that an equitable subrogation claim?

[00:10:55] Speaker 04:
The case that St.

[00:10:57] Speaker 00:
Paul is citing to.

[00:11:00] Speaker 00:
It recognized it.

[00:11:01] Speaker 00:
It was a case where an insurer was compensated in part by an insurance company for a stolen car.

[00:11:07] Speaker 00:
But the insurer then proceeded to find its own interest.

[00:11:10] Speaker 00:
And the question was, could it do that, or had its rights been totally subrogated to the insurer who had already paid?

[00:11:16] Speaker 00:
The court found that the insured was only partially compensated, so it too had a right to continue to pursue damages.

[00:11:23] Speaker 00:
But it recognized there that absolutely the insurer would have had the right to step into the shoes of the insured and recognized equitable subrogation.

[00:11:31] Speaker 00:
So I would answer yes, but I'm explaining to you the facts of the case.

[00:11:35] Speaker 00:
Your Honor, St.

[00:11:36] Speaker 00:
Paul would turn, it would effectively eviscerate equitable subrogation law in Nevada.

[00:11:42] Speaker 00:
And Nevada has recognized it.

[00:11:44] Speaker 03:
Only in the insurance context.

[00:11:45] Speaker 00:
But it has been recognized in the insurance context.

[00:11:49] Speaker 00:
I don't know that that's true, Your Honor.

[00:11:51] Speaker 03:
Well, but Nevada has a long history of recognizing equitable subrogation in different circumstances.

[00:11:59] Speaker 00:
Right.

[00:11:59] Speaker 03:
I mean, I just read this case as just being unique.

[00:12:02] Speaker 03:
That is, St.

[00:12:03] Speaker 03:
Paul is just unique in its own setting.

[00:12:06] Speaker 00:
We have to focus on what the rationale is.

[00:12:08] Speaker 03:
What the court said is.

[00:12:09] Speaker 03:
The problem that I see with just

[00:12:12] Speaker 03:
wholeheartedly applying St.

[00:12:14] Speaker 03:
Paul is one, that was a three judge opinion by the Nevada Supreme Court.

[00:12:18] Speaker 03:
It wasn't the five judges.

[00:12:19] Speaker 00:
Well, St.

[00:12:20] Speaker 00:
Paul had six judges, Your Honor.

[00:12:22] Speaker 00:
The Aspen case had three judges.

[00:12:24] Speaker 00:
That's correct.

[00:12:25] Speaker 00:
And I want to talk about the composition of the court too, because that has changed.

[00:12:29] Speaker 00:
And there's no reason to believe it would be the same.

[00:12:31] Speaker 03:
Well, let me ask you this.

[00:12:31] Speaker 03:
If we really have concerns about whether or not we should follow St.

[00:12:39] Speaker 03:
Paul,

[00:12:41] Speaker 03:
Should we certify that question to the Nevada Supreme Court?

[00:12:44] Speaker 00:
You certainly could, but under our choice of law analysis, Your Honor, again, if you look at what the St.

[00:12:49] Speaker 00:
Paul rule is, it's intended to protect insurers against subrogation claims by one another.

[00:12:55] Speaker 00:
There is no insurer in this case that's a Nevada resident, and under Hurtado,

[00:13:00] Speaker 00:
That means Nevada doesn't have an interest in this case whatsoever.

[00:13:04] Speaker 00:
You've got to look at the Hurtado analysis and think, is the rule in St.

[00:13:08] Speaker 00:
Paul, does Nevada have an interest in having the rule in St.

[00:13:11] Speaker 00:
Paul applied here?

[00:13:13] Speaker 00:
That rule arguably protects insurers from equitable subrogation claims from each other.

[00:13:20] Speaker 00:
The insurers in this case are not Nevada residents.

[00:13:24] Speaker 00:
And under Hurtado, that means Nevada does not have an interest in having St.

[00:13:30] Speaker 00:
Paul

[00:13:30] Speaker 00:
applied to this case.

[00:13:32] Speaker 00:
I see that my time is running out, Your Honor.

[00:13:34] Speaker 00:
I'll reserve unless there's further questions you'd like me to answer now.

[00:13:38] Speaker 04:
Thank you.

[00:13:38] Speaker 00:
Thank you very much, Your Honor.

[00:13:46] Speaker 02:
Good morning.

[00:13:47] Speaker 02:
May it please the court?

[00:13:48] Speaker 02:
Jeffrey Camiso for James River.

[00:13:53] Speaker 02:
The district court correctly applied Nevada law to this dispute.

[00:13:57] Speaker 02:
Nevada citizen, murdered in a Nevada apartment complex, owned and operated by a Nevada partnership.

[00:14:03] Speaker 02:
The underlying lawsuit was in Nevada court.

[00:14:05] Speaker 02:
It was settled in Nevada.

[00:14:07] Speaker 03:
That insured has been, the plaintiff in that case, has been fully taken care of.

[00:14:13] Speaker 02:
The estate and the heirs.

[00:14:15] Speaker 02:
Yes, the estate.

[00:14:16] Speaker 02:
I'm sorry, the estate.

[00:14:17] Speaker 02:
I can't represent that they've been fully taken care of.

[00:14:19] Speaker 02:
Well, I mean, they settled the case.

[00:14:20] Speaker 02:
Yes, sir.

[00:14:20] Speaker 02:
And they got their money.

[00:14:21] Speaker 03:
Yes, your honor, yes.

[00:14:22] Speaker 03:
And now we're fighting between the insurance companies, correct?

[00:14:24] Speaker 02:
And now it is about the money, correct, your honor.

[00:14:27] Speaker 02:
The district court correctly dismissed James River's case because under Nevada law, an excess carrier cannot sue a primary carrier for failure to settle if that settlement happened within the combined limits.

[00:14:39] Speaker 02:
And you get that from St.

[00:14:40] Speaker 02:
Paul.

[00:14:41] Speaker 02:
I get that from St.

[00:14:41] Speaker 02:
Paul.

[00:14:42] Speaker 02:
Now, St.

[00:14:43] Speaker 02:
Paul... An unpublished opinion.

[00:14:46] Speaker 02:
Well, Your Honor, it is unpublished and it is persuasive opinion.

[00:14:51] Speaker 02:
Why it is unpublished is a head-scratcher.

[00:14:53] Speaker 02:
It looks like it started out as an en banc decision selected by the court under its rules for en banc decision.

[00:14:59] Speaker 02:
Then it looks like a justice retired, so they had six judges, four-two majority in favor of the rule in St.

[00:15:06] Speaker 02:
Paul.

[00:15:08] Speaker 02:
The dissent makes the precise argument that my friends from North River make.

[00:15:13] Speaker 02:
The dissent did not carry the day.

[00:15:15] Speaker 02:
In this context, insurer versus insurers arguing over a settlement, Nevada's Supreme Court has concluded, unlike other states, there is no equitable subrogation claim.

[00:15:27] Speaker 02:
To the extent that there are complaints about whether the Nevada Supreme Court made the right call, this can only be addressed to the Nevada legislature or to the court itself.

[00:15:35] Speaker 02:
I'm sorry.

[00:15:37] Speaker 03:
No, you're right.

[00:15:38] Speaker 03:
But let me just.

[00:15:39] Speaker 03:
So the two insurance companies that are involved here, neither one of them are based in

[00:15:44] Speaker 02:
That is correct.

[00:15:48] Speaker 02:
That is correct.

[00:15:48] Speaker 02:
Neither one is based in Nevada, neither one is based in California.

[00:15:53] Speaker 03:
With respect to... But the insured, the party named on the policy is in California.

[00:16:00] Speaker 02:
That's incorrect.

[00:16:02] Speaker 02:
The policy has a first named insured, which is a California company.

[00:16:07] Speaker 02:
There are additional insureds, which are separate.

[00:16:08] Speaker 04:
And that's LA Pacific Center.

[00:16:09] Speaker 02:
That is correct, Your Honor.

[00:16:11] Speaker 02:
The other insureds are separate entities and are Nevada.

[00:16:15] Speaker 02:
There's a Nevada partnership among them, which is the only entity connected to this.

[00:16:19] Speaker 02:
Under the law of California, Nevada, and the terms of the policy, each policy holder, each named insured is equal.

[00:16:27] Speaker 02:
They are treated separately.

[00:16:29] Speaker 02:
There is no such thing as the lead named insured.

[00:16:32] Speaker 02:
There are named insureds, and then there are insureds by definition.

[00:16:35] Speaker 04:
So the Nevada entities are not additionally insureds?

[00:16:39] Speaker 02:
They are additional named insureds, which is to say they're not the first person on the policy.

[00:16:44] Speaker 02:
It says first named insured.

[00:16:46] Speaker 02:
That's where the first address is.

[00:16:48] Speaker 02:
Then you flip a few pages, and they say additional named insureds, and it lists the additional entities.

[00:16:53] Speaker 02:
Each of those companies has separate rights under this policy.

[00:16:57] Speaker 04:
Do you agree with counsel that Aspen's specialty was bound by the earlier case?

[00:17:04] Speaker 02:
Aspen's specialty was a three-judge panel under the rules of the Nevada court.

[00:17:08] Speaker 02:
I believe that that is correct.

[00:17:10] Speaker 02:
They're like an appellate court, so they're sort of bound by what the... I think that's correct unless there's an on-box decision changing the law.

[00:17:18] Speaker 02:
I will also say that they did describe it as controlling authority and issued a writ of mandamus to the trial court to follow the rule.

[00:17:27] Speaker 02:
So it seems to me that

[00:17:33] Speaker 02:
It seems extraordinary to suggest that Aspen and St.

[00:17:35] Speaker 02:
Paul are not the law of Nevada.

[00:17:38] Speaker 02:
Well, they're not.

[00:17:40] Speaker 02:
Well, I wouldn't tell that to the Nevada Supreme Court, Your Honor.

[00:17:43] Speaker 03:
No, but how about to the Nevada trial courts?

[00:17:46] Speaker 03:
Are they bound to follow it?

[00:17:47] Speaker 03:
Are they bound to follow unpublished opinions?

[00:17:50] Speaker 02:
The Nevada, they are not bound.

[00:17:52] Speaker 02:
It is not binding authority.

[00:17:53] Speaker 02:
It is persuasive.

[00:17:53] Speaker 02:
But I'll say this.

[00:17:55] Speaker 02:
Persuasive authority from the highest court in your jurisdiction is pretty dang persuasive.

[00:18:00] Speaker 02:
I don't think I'd be very comfortable walking into the United States District Court and saying, well, there's an unpublished opinion by the United States Supreme Court, which is on point.

[00:18:08] Speaker 02:
But you should go ahead and ignore it.

[00:18:10] Speaker 03:
Let me ask you this.

[00:18:10] Speaker 03:
Do you think that this eliminates equitable subrogation?

[00:18:14] Speaker 02:
I do not.

[00:18:14] Speaker 03:
In Nevada?

[00:18:15] Speaker 02:
I do not.

[00:18:16] Speaker 03:
Why not?

[00:18:17] Speaker 02:
This is an equitable case.

[00:18:19] Speaker 02:
Each case is limited.

[00:18:19] Speaker 02:
Each holding is limited to its facts.

[00:18:21] Speaker 02:
This is a pretty narrow situation.

[00:18:23] Speaker 02:
And for that matter, if there was a judgment in excess of limits or some other damage is alleged other than what was owed under the policy, that is a hypothetical situation.

[00:18:33] Speaker 03:
Maybe I should have clarified my question.

[00:18:35] Speaker 03:
In circumstances such as this,

[00:18:38] Speaker 03:
where the settlement is within the total combined policies between the primary and the excess.

[00:18:47] Speaker 03:
Is your position that St.

[00:18:48] Speaker 03:
Paul forecloses any such claims in the future going forward?

[00:18:53] Speaker 02:
I'm only here to litigate this case, Your Honor, I don't know.

[00:18:56] Speaker 03:
You're telling us that St.

[00:18:58] Speaker 03:
Paul is binding, so that must mean that this would foreclose, St.

[00:19:02] Speaker 03:
Paul forecloses any further case, any future case where the settlement is within the combined policy limits, like here.

[00:19:10] Speaker 02:
First, let me clarify.

[00:19:13] Speaker 02:
Number one, I don't want to miss, if I misspoke, I want to be clear that under the rules of the Nevada Supreme Court, St.

[00:19:18] Speaker 02:
Paul is not binding authority, it is persuasive authority in Nevada.

[00:19:22] Speaker 02:
But in your view, it's persuasive in every future case.

[00:19:26] Speaker 02:
Unless there's some later developments in the case law from the Nevada courts.

[00:19:30] Speaker 03:
Why do you think the Nevada Supreme Court would make such a rule or make such a persuasive decision and do that in an unpublished opinion?

[00:19:38] Speaker 03:
See, it strikes me as kind of odd, because they have a strong tradition of recognizing equitable subrogation across different kinds of circumstances, different industries and whatnot.

[00:19:49] Speaker 03:
They clearly recognize equitable subrogation.

[00:19:52] Speaker 03:
And they look to California to help guide their approach.

[00:19:56] Speaker 02:
Except when they don't, Your Honor.

[00:19:57] Speaker 03:
Yeah, that's true.

[00:19:58] Speaker 03:
But they have a strong tradition of looking at California law.

[00:20:01] Speaker 02:
I don't know that I would... I'm not going to... I don't know that that's necessarily true.

[00:20:05] Speaker 02:
What I will say is that there are plenty of times when Nevada has looked to California law or to Arizona law or the law of Washington or to some other state in the district.

[00:20:15] Speaker 02:
I'm sorry, Your Honor, I've lost the thread of your original question.

[00:20:17] Speaker 02:
Would you mind repeating it?

[00:20:18] Speaker 02:
So am I. Okay.

[00:20:20] Speaker 02:
I will say it was an excellent question, and I'm sorry that I lost the thread there.

[00:20:23] Speaker 04:
Let me ask this.

[00:20:26] Speaker 04:
Can you respond to counsel's argument about Hurtado and why that would make the interest reside with California?

[00:20:35] Speaker 02:
I don't understand how California has any interest here.

[00:20:39] Speaker 02:
No one involved.

[00:20:40] Speaker 03:
Please start out.

[00:20:41] Speaker 03:
It's a form.

[00:20:42] Speaker 03:
The district court is sitting in California.

[00:20:44] Speaker 03:
So presumptively, California law applies.

[00:20:48] Speaker 03:
That's where you start.

[00:20:49] Speaker 02:
That's not true, Your Honor.

[00:20:50] Speaker 02:
Presumptively, you follow the choice of law rules for the state in which the district court sits.

[00:20:55] Speaker 03:
Only if there's a conflict.

[00:20:57] Speaker 02:
Still, that's the analysis.

[00:20:59] Speaker 02:
The analysis starts with the choice of law analysis.

[00:21:01] Speaker 02:
Is there a conflict?

[00:21:02] Speaker 03:
Well, counsel argues there's no conflict.

[00:21:04] Speaker 02:
Counsel's incorrect.

[00:21:05] Speaker 04:
And so the question is why?

[00:21:08] Speaker 04:
Because counsel is relying on Hurtado and I'm asking you to address that.

[00:21:19] Speaker 02:
At least somebody in Hurtado had a connection to California.

[00:21:23] Speaker 02:
I don't know how I can do a better job of addressing the question, Your Honor.

[00:21:27] Speaker 02:
I don't see any connection to this case to California other than

[00:21:32] Speaker 02:
the accident that one another company that's on the same policy has a California address.

[00:21:37] Speaker 02:
Nothing is alleged that ties this matter to California.

[00:21:42] Speaker 02:
I'm sorry.

[00:21:43] Speaker 02:
I just remembered your question.

[00:21:47] Speaker 02:
It was, why did the Nevada Supreme Court choose not to publish this decision?

[00:21:51] Speaker 02:
I believe that the court probably, look, I'm speculating, so I apologize for that.

[00:21:55] Speaker 02:
I believe that the court intended to publish this decision because it was tagged from the beginning to be an en banc decision.

[00:22:01] Speaker 02:
I suspect that it's the retirement of one of the judges that made the court decide not to publish it.

[00:22:05] Speaker 02:
But again, that is speculation most rank.

[00:22:09] Speaker 02:
That being said.

[00:22:10] Speaker 01:
I want to go back to the Hurtado question slightly.

[00:22:14] Speaker 02:
Oh, I'm sorry, Your Honor.

[00:22:17] Speaker 01:
Is my understanding correct that North River and James River both are not California residents?

[00:22:23] Speaker 01:
So the only California resident that we're dealing with in this case is LA Pacific Center.

[00:22:28] Speaker 01:
Is that correct?

[00:22:30] Speaker 02:
That is incorrect, Your Honor.

[00:22:31] Speaker 02:
LA Pacific Center is not a party to this case, is not mentioned in any of the pleadings, and is not involved.

[00:22:38] Speaker 01:
All right.

[00:22:38] Speaker 01:
I mean, that's a fair point, but am I right that LA Pacific Center, in terms of

[00:22:43] Speaker 01:
the entities that we have been referencing who are involved in the policy in some way.

[00:22:48] Speaker 01:
LA Pacific Center is a named insured in the policy that we care about.

[00:22:51] Speaker 01:
Is that the only entity connected to California in your view?

[00:22:54] Speaker 02:
That is correct, Your Honor.

[00:22:59] Speaker 01:
And are North River or James River either one Nevada residents?

[00:23:04] Speaker 02:
No, Your Honor.

[00:23:05] Speaker 02:
Actually, I cannot.

[00:23:06] Speaker 02:
I don't know.

[00:23:07] Speaker 02:
I don't have personal knowledge of North River.

[00:23:08] Speaker 02:
I do not believe so.

[00:23:09] Speaker 02:
I don't believe that's alleged.

[00:23:11] Speaker 02:
And James River is certainly not.

[00:23:14] Speaker 04:
And other than being named on the policy, do we know anything about LA Pacific Center or whether they have any connection to this case otherwise?

[00:23:22] Speaker 02:
There's no allegations connecting them to this case, Your Honor.

[00:23:26] Speaker 02:
All I can say is what I said in the brief, which is they have an LA address and an LA sounding name, but they are not connected to this matter.

[00:23:34] Speaker 02:
With respect to that.

[00:23:34] Speaker 03:
So let me ask you this.

[00:23:36] Speaker 03:
So if we were to conclude that you look at St.

[00:23:42] Speaker 03:
Paul and

[00:23:43] Speaker 03:
the related case.

[00:23:45] Speaker 03:
We can't ignore those cases, certainly for purposes of choice of law.

[00:23:53] Speaker 03:
So it looks like there might be a conflict.

[00:23:56] Speaker 03:
But do you think it would be prudent on our part to ask the Nevada Supreme Court whether the equitable subrogation claim here is foreclosed as a result of the unpublished decision in St.

[00:24:12] Speaker 03:
Paul?

[00:24:15] Speaker 03:
The other one.

[00:24:18] Speaker 02:
It's, of course, the is, of course, the court's option to do so.

[00:24:21] Speaker 02:
I don't think it's necessary.

[00:24:22] Speaker 02:
The Nevada Supreme Court has decided this issue.

[00:24:27] Speaker 02:
We know what the Nevada Supreme Court is going to do, and the holding is the holding.

[00:24:33] Speaker 02:
The rule in the Ninth Circuit, and I believe elsewhere, is that, you know, we don't speculate about how the court might change or how the law might change.

[00:24:40] Speaker 02:
We take the law as we find it, and the law as we find it in Nevada.

[00:24:43] Speaker 02:
is that an excess carrier cannot sue a primary carrier in equitable subrogation, where the matter settles within limits.

[00:24:50] Speaker 03:
Is that because, let me ask you that, just the foundations of that point, is that because the injured party was fully compensated, or is that because, and therefore the parties really don't suffer any loss, they paid what they had to pay under their policies?

[00:25:08] Speaker 02:
I think that's correct.

[00:25:13] Speaker 02:
The reasoning of the Nevada Supreme Court is, look, exhaustion of the limits by settlement within the limits protects the insured from the harm that the duty to settle is supposed to prevent.

[00:25:24] Speaker 02:
So if something settles and there's no monies outside of the limits,

[00:25:30] Speaker 02:
The policy holder didn't suffer any damages.

[00:25:33] Speaker 02:
No damages to the policy holder, therefore, there's no claim for the excess insurer to subrogate to.

[00:25:40] Speaker 02:
As counsel has pointed out in the dissent in St.

[00:25:42] Speaker 02:
Paul, there's an objection to that, which is to say, no, wait, the damages you should be focusing on are the ones that were prevented here.

[00:25:52] Speaker 02:
Other courts have gone the other way.

[00:25:53] Speaker 02:
Nevada has decided in this context, the context of equitable subrogation between carriers, no.

[00:26:00] Speaker 02:
It's not how it's going to work.

[00:26:01] Speaker 02:
And the reason for that could be, at some level, this is an insurance company, this is a commercial insurer, you accepted your premium, you're an excess carrier, you didn't pay more than your limits, you got what you bargained for.

[00:26:15] Speaker 02:
Council will disagree with that.

[00:26:17] Speaker 02:
I might disagree with that if rules were reversed, but none of us is in a position to tell the Nevada Supreme Court that they got Nevada law wrong.

[00:26:25] Speaker 01:
Council, I want to jump in on that point.

[00:26:27] Speaker 01:
So assuming we accept that there looks like to be a conflict between Nevada and California law on that point, as you've just described, then under the choice of law analysis, a further question we have to ask is, even if there's a conflict, is it material in the sense of looking at which state is going to be more impaired by not having their law applied?

[00:26:48] Speaker 01:
That's a further question we have to ask.

[00:26:51] Speaker 01:
And when we ask that question, we look at the state's relative commitment to the LAHSA issue, and we look at the history and current status of those LAHSA issue.

[00:27:00] Speaker 01:
And here, where the Nevada rule that we're looking at that would create the conflict is unpublished and has never been made binding, doesn't that counsel against Nevada having a significant interest in that would be harmed if we did not apply that rule?

[00:27:18] Speaker 02:
I think the—I understand what you're asking, and I'm obviously—I can't agree because it's bad for my client's position.

[00:27:25] Speaker 02:
The upshot here is there is no interest of California in this dispute whatsoever.

[00:27:32] Speaker 01:
Well, California does have a very settled rule about equitable subrogation.

[00:27:38] Speaker 01:
And so then we ask, do we have a conflict between these two states?

[00:27:41] Speaker 01:
And we say, yes, it looks like they have different principles.

[00:27:45] Speaker 01:
And then we ask, whose interest is more impacted if they don't get to have their law applied?

[00:27:50] Speaker 01:
And we set, for purposes of my question, set aside who, where did the thing happen, and where are the parties based, and all that stuff.

[00:27:57] Speaker 01:
That's a separate question, I think.

[00:27:59] Speaker 01:
If we look at which state is sort of more

[00:28:03] Speaker 01:
Which state has invested more in the rule that we care about and that we're talking about?

[00:28:07] Speaker 01:
It seems like California has invested more in its rule because Nevada hasn't even made its rule binding.

[00:28:14] Speaker 02:
I cannot accept the premise that because California has more cases, more published decisions, and more insurance bad-faith lawyers, that California has a stronger interest in Nevada in applying the law.

[00:28:28] Speaker 02:
California is a state different from Nevada.

[00:28:31] Speaker 02:
Nevada is entitled to go its own way.

[00:28:33] Speaker 02:
It has.

[00:28:34] Speaker 02:
There's gambling there.

[00:28:36] Speaker 02:
For example, it does things its own way.

[00:28:38] Speaker 02:
Other states do things their own way and we respect it.

[00:28:41] Speaker 02:
There's still one state in the union that has contributory negligence.

[00:28:45] Speaker 02:
I do not think that it is appropriate for someone to simply say, we've put the number of opinions on a scale and California's got more pages.

[00:28:54] Speaker 02:
It appears that I am out of time, Your Honor.

[00:28:56] Speaker 02:
Did I sufficiently answer your question?

[00:29:01] Speaker 02:
Thank you, Your Honor.

[00:29:03] Speaker 03:
Thank you.

[00:29:04] Speaker 03:
Thank you.

[00:29:12] Speaker 00:
Thank you.

[00:29:12] Speaker 00:
I want to hit a few points quickly.

[00:29:14] Speaker 00:
A federal district court sitting in diversity presumptively applies the laws of the forum state.

[00:29:20] Speaker 00:
The composition of the Nevada Supreme Court has changed.

[00:29:24] Speaker 00:
Justice Kadesh, who authored the dissent, is now the presiding justice.

[00:29:30] Speaker 00:
And the other dissenter remains on the court.

[00:29:33] Speaker 00:
Only three of the four justices who participated in the majority opinion in St.

[00:29:37] Speaker 00:
Paul

[00:29:38] Speaker 00:
remain on the court.

[00:29:39] Speaker 00:
So there's no reason to believe the composition is the same, and therefore, we'd have the same outcome on that ground alone.

[00:29:46] Speaker 00:
In terms of, I want to turn to the substance of the law.

[00:29:50] Speaker 01:
Have you started asking those kinds of questions?

[00:29:53] Speaker 01:
Why wouldn't we just certify?

[00:29:54] Speaker 01:
Like, why would we speculate about who's on the court and who's not on the court?

[00:29:58] Speaker 01:
If we really cared and got that far in the analysis, why wouldn't we just certify?

[00:30:02] Speaker 00:
I don't think you need to your honor because, as I said, I think her todos analysis is dispositive here demonstrating that Nevada does not have an interest and therefore there's no need to certify and get into these issues I address it to address the one argument.

[00:30:16] Speaker 00:
that my colleague makes about why you should actually implement the rule of St.

[00:30:20] Speaker 00:
Paul and recognize it.

[00:30:22] Speaker 00:
He says nothing about the substance of that case or how it's upending the law of equitable subrogation in Nevada if it were to apply.

[00:30:29] Speaker 00:
The fundamental principle there, the rationale says if the insured is compensated, it has no harm.

[00:30:36] Speaker 00:
That concept is a basic precept, as Justice Kadesh said, to equitable subrogation.

[00:30:43] Speaker 00:
Always the insurer is compensating the insured and then stepping into the shoes of the insured to assert a claim on its behalf effectively, the derivative claim.

[00:30:53] Speaker 00:
If the analysis is, once the insurer pays the insured, there's no harm.

[00:30:58] Speaker 00:
You can't step into the shoes.

[00:31:01] Speaker 00:
That is what upends equitable subrogation law.

[00:31:04] Speaker 00:
And that's why the Supreme Court's decision or the unpublished decision

[00:31:09] Speaker 00:
is not persuasive.

[00:31:11] Speaker 00:
There's nothing in that case that says they recognize that what they were doing was effectively undermining the law of equitable subjugation in Nevada, but that's what the rationale of that decision would do.

[00:31:21] Speaker 04:
But when we think about whether there's a conflict between laws, are we supposed to entertain how persuasive one of those decisions might be?

[00:31:32] Speaker 04:
How does persuasiveness enter into it, whether one agrees or disagrees with that decision?

[00:31:38] Speaker 00:
Again first you don't get to that question if you don't have a conflict of laws and I guess I would say in trying to decide what Nevada law is you could look at the persuasive value of

[00:31:50] Speaker 00:
the unpublished opinion to determine if in fact it ought to be followed such that it would create a conflict of law and then even if it did your honor here because that law does not protect the interest of any Nevada resident here that again and ends the analysis you don't need to go there there's so many steps

[00:32:09] Speaker 00:
off the train as to why you don't need to engage in applying Nevada law here.

[00:32:14] Speaker 00:
And finally, Your Honor, I want to make sure I say this before I run out of time and then I want to answer any other questions you may have.

[00:32:20] Speaker 00:
But here this was decided on a motion to dismiss.

[00:32:23] Speaker 00:
There was summary judgment.

[00:32:25] Speaker 00:
North River has not been given the opportunity to articulate other damages.

[00:32:29] Speaker 00:
We think

[00:32:30] Speaker 00:
It would be wrong to apply St.

[00:32:31] Speaker 00:
Paul.

[00:32:32] Speaker 00:
We don't think it's a binding decision and should be applied.

[00:32:34] Speaker 00:
But even if St.

[00:32:36] Speaker 00:
Paul were to apply, North River should be given the opportunity to articulate other types of damages.

[00:32:42] Speaker 00:
And I mentioned it earlier, the fact that it's insured, Alhambra Place, the Nevada insured, and LA Pacific Center,

[00:32:49] Speaker 00:
don't have access to $4 million of their $10 million excess policy going forward is harm.

[00:32:56] Speaker 00:
It's an occurrence-based policy with an aggregate limit.

[00:32:59] Speaker 00:
That means if there's claims that come in relating to the 2017-2018 time period today, they are down $4 million.

[00:33:07] Speaker 00:
They don't have $4 million that they should have available to them in their excess policy because of James Rivers'

[00:33:16] Speaker 00:
failure to comply with its duty to settle.

[00:33:20] Speaker 00:
And North River ought to be able to stand in the shoes in order to assert those rights.

[00:33:25] Speaker 00:
Thank you very much, Your Honor.

[00:33:26] Speaker 00:
If there's no further questions.

[00:33:27] Speaker 00:
No other questions.

[00:33:29] Speaker 00:
Thank you.

[00:33:29] Speaker 04:
Thank you, Council, for your arguments.

[00:33:31] Speaker 04:
The matter will stand submitted and in court as adjourned for a brief recess.

[00:33:36] Speaker 00:
All rise.

[00:33:42] Speaker 00:
This court stands in recess.