1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 Donald Humes, Case No.: 2:17-cv-01778-JAD-DJA 4 Plaintiff 5 Order Granting Motion for Leave v. to File Amended Complaint 6 Acuity, A Mutual Insurance Company, [ECF No. 194] 7 Defendant 8
9 In 2013, Donald Humes filed a claim with his automobile-insurance company, Acuity, 10 which the insurer denied. So Humes sued the insurer for breach of contract and bad faith in 11 Nevada state court, and Acuity removed the action to this court. The claims were bifurcated, and 12 the contract claim was tried in May 2021. The four-day jury trial ended in a $860,794.06 verdict 13 against Acuity. The bad-faith claim is set for trial later this year. Humes now moves for leave to 14 file an amended complaint, seeking to add claims under Nevada’s Unfair Claims Settlement 15 Practices Act, which requires insurance companies to acknowledge, investigate, process, settle, 16 and pay out their insureds’ claims in a prompt and fair manner.1 Acuity opposes the motion, 17 arguing that it’s futile and untimely, and that if the court grants it, discovery should be 18 reopened.2 Good cause appearing, I grant Humes’ motion and deny Acuity’s request to reopen 19 discovery. Humes’s common-law and statutory bad-faith claims may proceed to trial. But first, 20 I refer this case to the magistrate judge for a mandatory settlement conference. 21 1 ECF No. 194; see Nev. Rev. Stat. § 686A.310. I advise the parties to comply with this 22 district’s Local Rules in the future. Discrete exhibits must be individually filed, and all “[d]ocuments filed electronically must be filed in a searchable” format. L.R. IA 10-1, IA 10-3, 23 IC 2-2(a)(3). 2 ECF No. 196. 1 Discussion 2 Humes moves to amend his complaint to add a claim alleging that Acuity’s actions before 3 and during the pendency of this lawsuit amount to unfair claims practices under NRS 686A.310.3 4 Federal Rule of Civil Procedure 15 directs federal courts to “freely give leave when justice so
5 requires,”4 and district courts consider five factors in deciding whether to grant leave to amend: 6 (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4) futility of amendment, and 7 (5) whether the party has previously amended its pleading.5 These factors weigh in Humes’s 8 favor, as he has not previously amended his complaint6 and his proposed new claim is premised 9 in part on information learned during and after trial,7 which demonstrates a lack of undue delay 10 or bad faith on his part. And because this matter is scheduled for trial regardless of whether 11 Humes is given leave to amend at this point, there is no evident prejudice to Acuity. 12 Acuity contends that amendment would be futile because Humes’s proposed new claim is 13 insufficiently pled and—given that I previously held that the contractual and bad-faith claims 14 were governed by South Dakota law8—a claim under Nevada law cannot be appended to this
15 case.9 But Acuity provides no analysis or authority, binding or persuasive, that would indicate 16 that a court’s determination that a contract sued upon is governed by one state’s laws controls the 17 18 3 ECF No. 194. 19 4 Fed. R. Civ. P. 15(a)(2). 20 5 Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004). 6 Humes first moved for leave to amend his complaint to add an unfair-claims-practices claim in 21 April 2018. See ECF No. 26. The magistrate judge denied that motion without prejudice. ECF No. 35. 22 7 See ECF No. 45 at 6–9. 23 8 ECF No. 97. 9 ECF No. 196. 1 choice of law for every extracontractual claim in the case. Under the rule of dépeçage, courts 2 determine which state’s laws apply to each claim or issue in case, rather than making a blanket 3 decision to cover all claims.10 Because the Nevada Supreme Court has not spoken on the 4 question whether dépeçage should be adopted in this state, I must predict whether it would adopt
5 it if this case were before that court.11 I find that it would. Although the Nevada Supreme 6 Court’s decision in Northwest Pipe Company v. Eighth Judicial District Court didn’t mention the 7 rule or indicate that the Court was applying it, the Court effectively used it by applying Nevada 8 law to Nevada plaintiffs and California law to California plaintiffs in that wrongful-death suit.12 9 In addition, Nevada courts often follow the lead of California courts, and because California 10 applies dépeçage,13 I find it likely that the Nevada Supreme Court would adopt it if given the 11 opportunity. 12 Even when a contract contains a choice-of-law provision, courts often find that, absent a 13 comprehensive clause that explicitly applies it to all disputes between the contracting parties, not 14
15 16 10 Dépeçage, Black’s Law Dictionary (11th ed. 2019) (“A court’s application of different state 17 laws to different issues in a legal dispute; choice of law on an issue-by-issue basis.”). 18 11 Lewis v. Tel. Emps. Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996). 12 Nw. Pipe Co. v. Eighth Jud. Dist. Ct. ex rel. Cnty. of Clark, 42 P.3d 244, 245–46, 248 (Nev. 19 2002) (Agosti, J., dissenting) (“[B]ecause two justices dissent to Nevada law being applied to the California plaintiffs’ causes of action, and because I and the justice who concurs with me join 20 them in this conclusion, we comprise a majority and California law will be applied to those causes of action. Thus, California law will apply to some but not all the plaintiffs in this 21 action.”). In a similar vein, another judge in this district conducted a choice-of-law analysis for the extracontractual claims in a breach-of-insurance-contract case even though the plaintiffs had 22 conceded that Colorado law, and not Nevada law, applied to the contractual claim. See Vignola v. Gilman, 854 F. Supp. 2d 883, 886 (D. Nev. 2012). 23 13 See Washington Mut. Bank, FA v. Superior Ct., 15 P.3d 1071, 1081 (Cal. 2001) (“[A] separate conflict of laws inquiry must be made with respect to each issue in the case”). 1 every extracontractual claim falls within the provision.14 But there is no choice-of-law provision 2 in this case—only my previous determination as to what law controlled the two claims that 3 comprised this action at the time of that order.15 Humes sufficiently pleads facts indicating that 4 the unfair-claims practices of which he complains occurred in Nevada—indeed some of them
5 arise out of the jury verdict in his favor in this very courtroom.16 I thus see no reason to find that 6 Nevada-law-based claims cannot be added to Humes’s complaint. 7 Acuity also argues that Humes’s motion should be denied because it’s untimely under 8 NRS 686A.310’s three-year statute of limitations. But to the extent Humes’s unfair-claims- 9 practices claim is based on actions the insurer took prior to the initiation of this suit, those claims 10 relate back to the original complaint, which included a claim for common-law bad faith.17 And 11 to the extent it’s based on Acuity’s actions during and after last year’s trial, the statute of 12 limitations has not yet run.
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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 Donald Humes, Case No.: 2:17-cv-01778-JAD-DJA 4 Plaintiff 5 Order Granting Motion for Leave v. to File Amended Complaint 6 Acuity, A Mutual Insurance Company, [ECF No. 194] 7 Defendant 8
9 In 2013, Donald Humes filed a claim with his automobile-insurance company, Acuity, 10 which the insurer denied. So Humes sued the insurer for breach of contract and bad faith in 11 Nevada state court, and Acuity removed the action to this court. The claims were bifurcated, and 12 the contract claim was tried in May 2021. The four-day jury trial ended in a $860,794.06 verdict 13 against Acuity. The bad-faith claim is set for trial later this year. Humes now moves for leave to 14 file an amended complaint, seeking to add claims under Nevada’s Unfair Claims Settlement 15 Practices Act, which requires insurance companies to acknowledge, investigate, process, settle, 16 and pay out their insureds’ claims in a prompt and fair manner.1 Acuity opposes the motion, 17 arguing that it’s futile and untimely, and that if the court grants it, discovery should be 18 reopened.2 Good cause appearing, I grant Humes’ motion and deny Acuity’s request to reopen 19 discovery. Humes’s common-law and statutory bad-faith claims may proceed to trial. But first, 20 I refer this case to the magistrate judge for a mandatory settlement conference. 21 1 ECF No. 194; see Nev. Rev. Stat. § 686A.310. I advise the parties to comply with this 22 district’s Local Rules in the future. Discrete exhibits must be individually filed, and all “[d]ocuments filed electronically must be filed in a searchable” format. L.R. IA 10-1, IA 10-3, 23 IC 2-2(a)(3). 2 ECF No. 196. 1 Discussion 2 Humes moves to amend his complaint to add a claim alleging that Acuity’s actions before 3 and during the pendency of this lawsuit amount to unfair claims practices under NRS 686A.310.3 4 Federal Rule of Civil Procedure 15 directs federal courts to “freely give leave when justice so
5 requires,”4 and district courts consider five factors in deciding whether to grant leave to amend: 6 (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4) futility of amendment, and 7 (5) whether the party has previously amended its pleading.5 These factors weigh in Humes’s 8 favor, as he has not previously amended his complaint6 and his proposed new claim is premised 9 in part on information learned during and after trial,7 which demonstrates a lack of undue delay 10 or bad faith on his part. And because this matter is scheduled for trial regardless of whether 11 Humes is given leave to amend at this point, there is no evident prejudice to Acuity. 12 Acuity contends that amendment would be futile because Humes’s proposed new claim is 13 insufficiently pled and—given that I previously held that the contractual and bad-faith claims 14 were governed by South Dakota law8—a claim under Nevada law cannot be appended to this
15 case.9 But Acuity provides no analysis or authority, binding or persuasive, that would indicate 16 that a court’s determination that a contract sued upon is governed by one state’s laws controls the 17 18 3 ECF No. 194. 19 4 Fed. R. Civ. P. 15(a)(2). 20 5 Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004). 6 Humes first moved for leave to amend his complaint to add an unfair-claims-practices claim in 21 April 2018. See ECF No. 26. The magistrate judge denied that motion without prejudice. ECF No. 35. 22 7 See ECF No. 45 at 6–9. 23 8 ECF No. 97. 9 ECF No. 196. 1 choice of law for every extracontractual claim in the case. Under the rule of dépeçage, courts 2 determine which state’s laws apply to each claim or issue in case, rather than making a blanket 3 decision to cover all claims.10 Because the Nevada Supreme Court has not spoken on the 4 question whether dépeçage should be adopted in this state, I must predict whether it would adopt
5 it if this case were before that court.11 I find that it would. Although the Nevada Supreme 6 Court’s decision in Northwest Pipe Company v. Eighth Judicial District Court didn’t mention the 7 rule or indicate that the Court was applying it, the Court effectively used it by applying Nevada 8 law to Nevada plaintiffs and California law to California plaintiffs in that wrongful-death suit.12 9 In addition, Nevada courts often follow the lead of California courts, and because California 10 applies dépeçage,13 I find it likely that the Nevada Supreme Court would adopt it if given the 11 opportunity. 12 Even when a contract contains a choice-of-law provision, courts often find that, absent a 13 comprehensive clause that explicitly applies it to all disputes between the contracting parties, not 14
15 16 10 Dépeçage, Black’s Law Dictionary (11th ed. 2019) (“A court’s application of different state 17 laws to different issues in a legal dispute; choice of law on an issue-by-issue basis.”). 18 11 Lewis v. Tel. Emps. Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996). 12 Nw. Pipe Co. v. Eighth Jud. Dist. Ct. ex rel. Cnty. of Clark, 42 P.3d 244, 245–46, 248 (Nev. 19 2002) (Agosti, J., dissenting) (“[B]ecause two justices dissent to Nevada law being applied to the California plaintiffs’ causes of action, and because I and the justice who concurs with me join 20 them in this conclusion, we comprise a majority and California law will be applied to those causes of action. Thus, California law will apply to some but not all the plaintiffs in this 21 action.”). In a similar vein, another judge in this district conducted a choice-of-law analysis for the extracontractual claims in a breach-of-insurance-contract case even though the plaintiffs had 22 conceded that Colorado law, and not Nevada law, applied to the contractual claim. See Vignola v. Gilman, 854 F. Supp. 2d 883, 886 (D. Nev. 2012). 23 13 See Washington Mut. Bank, FA v. Superior Ct., 15 P.3d 1071, 1081 (Cal. 2001) (“[A] separate conflict of laws inquiry must be made with respect to each issue in the case”). 1 every extracontractual claim falls within the provision.14 But there is no choice-of-law provision 2 in this case—only my previous determination as to what law controlled the two claims that 3 comprised this action at the time of that order.15 Humes sufficiently pleads facts indicating that 4 the unfair-claims practices of which he complains occurred in Nevada—indeed some of them
5 arise out of the jury verdict in his favor in this very courtroom.16 I thus see no reason to find that 6 Nevada-law-based claims cannot be added to Humes’s complaint. 7 Acuity also argues that Humes’s motion should be denied because it’s untimely under 8 NRS 686A.310’s three-year statute of limitations. But to the extent Humes’s unfair-claims- 9 practices claim is based on actions the insurer took prior to the initiation of this suit, those claims 10 relate back to the original complaint, which included a claim for common-law bad faith.17 And 11 to the extent it’s based on Acuity’s actions during and after last year’s trial, the statute of 12 limitations has not yet run. So the claim is timely. I therefore grant Humes’s motion and give 13 him leave to amend his complaint. Humes has ten days to file his amended complaint in the 14 form proposed at exhibit 2 to ECF No. 194.
15 Finally, Acuity includes a two-sentence request that I reopen discovery so that the insurer 16 may retain an expert to build a defense against the new claim. But the factual bases for the new 17 claim are primarily the same factual bases undergirding the contractual and common-law bad- 18 faith claims Humes brought in 2017. Because the only changes that’ve occurred since discovery 19 closed prior to the first trial are the jury’s verdict in that trial and Acuity’s refusal to pay, I find 20
21 14 See, e.g., Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 726 (5th Cir.), opinion modified on denial of reh’g, 355 F.3d 356 (5th Cir. 2003). 22 15 See ECF No. 97. 23 16 See ECF No. 194 at ex. 2. 17 See Fed. R. Civ. P. 15(c). Acuity has not shown that reopening discovery for the retention of additional expert 2|| witnesses is necessary in this case. So I deny Acuity’s request. 3 Conclusion 4 IT IS THEREFORE ORDERED that Humes’s motion for leave to amend his complaint [ECF No. 194] is GRANTED. Humes has ten days to file his amended complaint in the form 6|| proposed at exhibit 2 to ECF No. 194. 7 IT IS FURTHER ORDERED that this case is REFERRED to the magistrate judge for MANDATORY SETTLEMENT CONFERENCE.
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