Bertagnolli v. White

 ORDER OF REVERSAL AND REMAND
These are appeals and a cross-appeal from a final judgment in
an action involving the sale of water rights and post-judgment orders
awarding attorney fees and costs and denying NRCP 60(b) relief. First
Judicial District Court, Carson City; James E. Wilson, Judge", and Robert
E. Rose, Senior Judge.
Respondents Jack White and Retireman LLC bought water
rights from appellant Tim Eugene Bertagnolli. White needed the water
rights for a planned residential housing development and Retireman
needed water rights for a retail tire shop. Both White and Retireman
allegedly relied on the advice of appellant Western Engineering &
Surveying Services, who affirmed that Bertagnolli's water rights could be
used for these purposes. However, when respondents tried to use their
water rights, the State Engineer refused to approve the transfers based on
language in Bertagnolli's original water permit indicating that his water
rights were only temporary. White and Retireman filed a complaint
against Bertagnolli and Western alleging numerous claims for relief.
Bertagnolli sought indemnification from Western and vice versa. Four
days into trial, Western settled with both respondents and the court
approved the settlement. Bertagnolli made his first motion for mistrial at
that time, which was denied. The jury subsequently found against
Bertagnolli.
This appeal involves a challenge to the district court's
interlocutory decision granting an oral motion accepting a good faith
'Judge Wilson presided over the hearing at which Bertagnolli
alleges the errors occurred.
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settlement proposal and a subsequent refusal by the district court to grant
a motion for a mistrial. We review both challenges for an abuse of
discretion. Doctors Co. v. Vincent, 120 Nev. 644, 652, 98 P.3d 681, 686-87
(2004); Romo v. Keplinger, 115 Nev. 94, 96, 978 P.2d 964, 966 (1999).
In analyzing whether a settlement was made in good faith, a
district court should consider all relevant facts available to it, which
includes evaluating the settlement amount, the financial condition of the
settling defendants, and the "relative liability permutations of the
particular contribution or indemnity action known to it, including the
strengths and weaknesses of the contribution or indemnity claims."
Doctors Co., 120 Nev. at 652, 98 P.3d at 686-87; see also Velsicol Chemical
Corp. v. Davidson, 107 Nev. 356, 360, 811 P.2d 561, 563 (1991); In re
MGM Grand Hotel Fire Litig., 570 F. Supp. 913, 927 (D. Nev. 1983).
Having reviewed the parties' briefs, oral arguments, and the appellate
record, we conclude that the district court abused its discretion in
approving the settlement because it failed to consider the full
ramifications of the indemnification and the financial positions of the
parties. Specifically, in deciding that the Western settlement was in good
faith, the district court's order notes only that it considered "the apparent
value of the settlement, Western's insurance limits, and the lack of acts
which would injure Bertagnolli." This portion of the district court's order
was wholly insufficient, as it failed to provide analysis concerning the
financial condition of the settling parties and indemnification, both
significant factors under the circumstances. The district court further
abused its discretion because, at the time the motion was made, the
financial terms of the settlement were not concrete. While not required by
statute, a settlement of this magnitude should have been set forth in a
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written order detailing the district court's rationale for approving the
settlement terms—a few pages of oral record is unsatisfactory. As a result
of this abuse of discretion, the settlement cannot pass muster.
Even if the settlement had been made in good faith, the
district court also abused its discretion by refusing to grant Bertagnolli's
first motion for mistrial because the timing of the settlement severely
prejudiced Bertagnolli's ability to appropriately defend the action. The
record reveals that but for Western's lack of due diligence in inspecting
Bertagnolli's original permit, White and Retireman would not have
purchased the water rights. If Western had knowledge of the Bertagnolli's
temporary water rights, Western should have advised against the
purchase. Thus, Western was an active participant and quite possibly
primarily responsible for the wrongs that caused the sale of temporary
water rights. See Doctors, 120 Nev. at 653, 98 P.3d at 687-88 ("``The right
of indemnity rests upon a difference between the primary [active] and the
secondary [passive] liability of two persons, each of whom is made
responsible by the law to an injured party.") With Western out of the
picture, liability was completely shifted to Bertagnolli and his trial
strategy had to change midway through trial. Therefore, we are not
convinced that Bertagnolli received a fair trial. A new trial, or even a
newly seated jury, would have alleviated any prejudice caused by the
settlement.
We also note that the district court did not provide the jury
with a special verdict form to assess the comparative fault of the
codefendants. "The general verdict rule does not apply in a case that
involves special findings that assign specific damages on specific theories
of recovery." Skender v. Brunsonbuilt Constr. & Dev. Co., 122 Nev. 1430,
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1438, 148 P.3d 710, 716 (2006). A special verdict form should be used
where there exists more than one theory of liability or defense. Id. Here,
because Bertagnolli argued indemnification and comparative fault from
the outset, a special verdict form is proper. Accordingly, we
ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for further proceedings
consistent with this order. 2
( , J
Hardesty
Parraguirre
cc: James E. Wilson, District Court Judge
Robert E. Rose, Senior Judge
William E. Nork, Settlement Judge
J.M. Clouser & Associates, Ltd.
Holland & Hart LLP/Reno
Lemons, Grundy & Eisenberg
Sullivan Law Offices
Carson City Clerk
2 Becausewe are reversing and remanding for further proceedings,
we need not address Bertagnolli's additional claims of error.
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