Court Opinion

ID: 2790027
Source: CourtListenerOpinion
Date Created: 2015-03-30 20:01:01.250293+00
Date Added: 2024-06-11T11:10:21.150791
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                MAR 30 2015

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

BOBBI JO DOCKINS,                                No. 13-15133

              Plaintiff - Appellant,             D.C. No. 2:11-cv-00907-KJD-
                                                 CWH
  v.

AMERICAN FAMILY FINANCIAL                        MEMORANDUM*
SERVICES, INC., American Family
Mutual Insurance Company,

              Defendants - Appellees.

                   Appeal from the United States District Court
                            for the District of Nevada
                    Kent J. Dawson, District Judge, Presiding

                      Argued and Submitted March 12, 2015
                           San Francisco, California

Before: BERZON, BYBEE, and OWENS, Circuit Judges.

       Appellant Bobbi Jo Dockins appeals the district court’s order granting

summary judgment to Appellees American Family Financial Services, Inc., and

American Family Mutual Insurance Company.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Proof that Dockins is legally entitled to recover from Allen Jackson Lynn is

a necessary element of her claims against Appellees for breach of contract and

breach of the covenant of good faith and fair dealing for denying Dockins’s

demand for underinsured motorist (“UIM”) coverage pursuant to the insurance

policy she had with Appellees. Dockins’s state tort suit against Lynn was

dismissed as a discovery sanction. The district court held that Nevada’s claim

preclusion doctrine bars Dockins from establishing that she is legally entitled to

recover from Lynn.

      We reverse.

      Federal courts sitting in diversity “determine the preclusive effect of a state

court judgment by applying that state’s preclusion principles.” ReadyLink

Healthcare, Inc. v. State Comp. Ins. Fund, 754 F.3d 754, 760 (9th Cir. 2014)

(citing 28 U.S.C. § 1738).

      “[F]or claim preclusion to apply [under Nevada law,] the following factors

must be met: (1) the same parties or their privies are involved in both cases, (2) a

valid final judgment has been entered, and (3) the subsequent action is based on the

same claims or any part of them that were or could have been brought in the first

case.” Five Star Capital Corp. v. Ruby, 194 P.3d 709, 714 (Nev. 2008).

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      Claim preclusion does not bar Dockins from establishing Lynn’s fault in this

litigation because two of the three claim preclusion elements are not satisfied. The

two suits involve neither the “same claims” nor the “same parties” under Nevada

law. Id.

      Dockins’s claims in this case are not “the same claims” as those in the prior

litigation under Nevada law. Id. “The Nevada test for identical causes of action is

whether the sets of facts essential to maintain the two suits are the same.”

Clements v. Airport Auth., 69 F.3d 321, 328 n.4 (9th Cir. 1995) (citing In re Estate

of Firsching, 578 P.2d 321, 322 (Nev. 1978)). As the Nevada Supreme Court has

explained, this means claim preclusion is only appropriate where “the entire

subject matter of the suits is identical,” Round Hill Gen. Improvement Dist. v.

B-Neva, Inc., 606 P.2d 176, 178 (Nev. 1980), or, in other words, where the later

claim is “based upon an identical set of facts and could have been brought

simultaneously” to the first. G.C. Wallace, Inc. v. Eighth Judicial Dist. Court ex

rel. Cnty. of Clark, 262 P.3d 1135, 1139 (Nev. 2011).

      While some facts are common to both cases, the entire subject matter of

Dockins’s present suit against Appellees is not identical to that of her suit against

Lynn. Dockins’s bad faith and breach of contract claims necessarily involve, at

least in part, facts relating to Appellee’s conduct occurring well after Dockins

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brought suit against Lynn, for example, Appellees’ conduct in denying her claim

despite allegedly “recogniz[ing] . . . their liability, pursuant to [the insurance]

contract,” to pay Dockins. Indeed, Dockins’s bad faith and breach of contract

claims against Appellees did not ripen until they denied her demand for UIM

benefits in September 2009, more than a year after her suit against Lynn was

dismissed. See Pemberton v. Farmers Ins. Exch., 858 P.2d 380, 382 (Nev. 1993)

(“An insurer fails to act in good faith when it refuses ‘without proper cause’ to

compensate the insured for a loss covered by the policy.”). Dockins therefore

could not “have . . . brought” her bad faith and breach of contract claims against

Appellees “simultaneously” to her claims against Lynn in 2005. G.C. Wallace,

Inc., 262 P.3d at 1139. For that reason, and because the “the entire subject matter

of the suits is [not] identical,” Round Hill, 606 P.2d at 178, the claims are not “the

same” for purposes of claim preclusion.

      Claim preclusion does not apply for the further reason that the parties in this

case are not the “same parties” as in the prior litigation. Ruby, 194 P.3d at 714.

The “same parties” factor in Nevada requires that “the same parties or their privies

are involved in both cases.” Id.

      The district court erroneously concluded that only Dockins need have been a

party (or in privity with a party) to the prior litigation, rather than both Appellees

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and Dockins. Ruby’s explication of the “same parties” element makes clear that

both the party against whom claim preclusion is asserted and the party asserting

claim preclusion must have been “involved” in the prior case or in privity with a

party involved in the prior case. Id.

      Paradise Palms Community Association v. Paradise Homes, 505 P.2d 596,

599 (Nev. 1973), holding that mutuality is not required for issue preclusion (also

known as collateral estoppel), did not disturb the general rule in Nevada that

mutuality is required for claim preclusion. As Ruby makes clear, claim preclusion

continues to require that “the same parties or their privies are involved in both

cases,” 194 P.3d at 714, whereas issue preclusion requires only that “the party

against whom the judgment is asserted must have been a party or in privity with a

party to the prior litigation,” id. at 713 (quoting Univ. of Nev. v. Tarkanian, 879

P.2d 1180, 1191 (Nev. 1994)) (internal quotation marks omitted).

      Appellees are not in privity with the defendant in the prior case, who was not

their insured, nor were they a party to that litigation. For that reason as well, claim

preclusion does not bar Dockins from bringing her claims against Appellees.

      Because claim preclusion does not bar Dockins from bringing her present

claims against Appellees or prevent her from establishing legal entitlement by

proving Lynn’s fault, summary judgment was inappropriate. We therefore reverse.

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REVERSED.

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