Opinion ID: 2329163
Heading Depth: 1
Heading Rank: 6

Heading: Davis's offer of compromise

Text: Davis asserts that the district court erred in excluding evidence of her offer to buy the Ping Property, under NRS 48.105, because she introduced this evidence for the purpose of showing that the Doughertys failed to mitigate their damages. According to Davis, NRS 48.105 does not mandate exclusion in such a circumstance. Although the district court's determination of the admissibility and relevance of evidence is generally reviewed for an abuse of discretion, Thomas v. Hardwick, 126 Nev. ___, ___, 231 P.3d 1111, 1117 (2010), to the extent the evidentiary ruling rests on a legal interpretation of the evidence code, de novo review obtains. Stephans v. State, 127 Nev. ___, ___, 262 P.3d 727, 730 (2011). When construing a statute, we first examine its plain meaning. Arguello v. Sunset Station, Inc., 127 Nev. ___, ___, 252 P.3d 206, 209 (2011). In examining the plain meaning of a statute, we read its provisions as a whole, and give effect to each of its words and phrases. Id. When a statute is clear and unambiguous, we give effect to the plain and ordinary meaning of the words and do not resort to the rules of construction. Cromer v. Wilson, 126 Nev. ___, ___, 225 P.3d 788, 790 (2010). An offer of compromise is an offer by one party to settle a claim where an actual dispute or a difference of opinion exists at the time the offer is made. Affiliated Mfrs., Inc. v. Aluminum Co. of America, 56 F.3d 521, 527 (3d Cir.1995). At the time that Davis offered to buy the Ping Property from the Doughertys, a dispute between the parties had arisen, and Davis cannot seriously contend otherwise. When Davis made her offer, the parties had obtained representation, and as Davis later testified, everyone was screaming litigation. As such, Davis's offer was clearly an offer of compromise. Concerning offers of compromise, NRS 48.105 provides: 1. Evidence of: (a) Furnishing or offering or promising to furnish; or (b) Accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. 2. This section does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. (Emphasis added.) Thus, NRS 48.105(1) requires the exclusion of evidence of offers of compromise when such evidence is introduced to prove liability or the amount of a claim. But NRS 48.105(2) qualifies the reach of NRS 48.105(1) by providing that the introduction of this evidence is not prohibited if offered for another purpose. We have not previously addressed whether evidence of an offer of compromise may be introduced for the purpose of demonstrating a failure to mitigate damages. We conclude that compromise offers are not admissible for this purpose because when evidence of an offer of compromise is used to show a failure to mitigate damages, such evidence inescapably goes to the amount of the claim. This type of evidence thus falls within the precise proscription set forth by NRS 48.105(1)(b). Therefore, pursuant to the plain language of the statute, offers of compromise are not admissible to prove a failure to mitigate damages. Our interpretation of NRS 48.105 finds ample support. When faced with this issue, federal circuit courts have concluded, after carefully construing Federal Rule of Evidence 408, the federal counterpart of NRS 48.105, that offers of compromise are not admissible on the issue of mitigation. For instance, in Stockman v. Oakcrest Dental Center, P.C., the United States Court of Appeals for the Sixth Circuit reasoned that mitigation necessarily goes to the amount of a claim, and therefore, admitting offers of compromise on the issue would violate[ ] Rule 408 on its face. 480 F.3d 791, 798 (6th Cir.2007). Similarly, in Pierce v. F.R. Tripler & Co., the United States Court of Appeals for the Second Circuit concluded that [e]vidence that demonstrates a failure to mitigate damages goes to the `amount' of the claim and thus, if the offer was made in the course of compromise negotiations, it is barred under the plain language of Rule 408. 955 F.2d 820, 826-27 (2d Cir.1992). [5] Moreover, the admission of evidence of compromise offers would not only violate the plain language of NRS 48.105(1)(b), it would undermine one of the statute's undisputed purposes, specifically, to prevent evidence of settlement efforts from `haunt[ing] a future legal proceeding.' Morrison v. Beach City LLC, 116 Nev. 34, 39, 991 P.2d 982, 985 (2000) (quoting Han v. Yang, 84 Hawai`i 162, 931 P.2d 604, 613 (1997)). Because the issue of mitigation centers on whether the injured party exercised reasonable care to avoid unnecessary damages, see Automatic Merchandisers, Inc. v. Ward, 98 Nev. 282, 284, 646 P.2d 553, 554 (1982), if evidence of compromise offers were admitted to show a failure of mitigation, then predictably, a substantial dispute would arise over whether the offer was reasonably refused. The facts of this case dramatically illustrate this concern. There is absolutely no indication that Davis was in a position to produce, on a moment's notice, the $825,000 necessary to purchase the Ping Property. And, in view of Davis's dishonesty in the parties' previous dealings, it can hardly be said that it was unreasonable for the Doughertys to refuse to enter into yet another transaction involving her. Thus, if evidence of Davis's offer of compromise were admitted, the Doughertys would have every reason to show just how tenuous the offer was, and a lengthy dispute over the issue could ensue, which is an outcome that NRS 48.105 was specifically intended to prevent. See Morrison, 116 Nev. at 39, 991 P.2d at 985. We also share the Second Circuit's concern in Pierce that the admission of such evidence would inhibit the efficient administration of justice by spurring a rash of motions for disqualification of a party's chosen counsel who would likely become a witness at trial. 955 F.2d at 828. As the court explained, because it is commonplace for attorneys to be closely involved in the parties' settlement efforts before trial, many attorneys would be forced to testify as to the nature of the discussions and thus be disqualified as trial counsel. Id. We therefore conclude that under NRS 48.105, evidence of offers of compromise is not admissible to demonstrate a failure to mitigate damages. Accordingly, the district court did not err in excluding evidence of Davis's offer to purchase the Ping Property from the Doughertys.