Court Opinion

ID: 9324131
Source: CourtListenerOpinion
Date Created: 2022-12-09 11:05:36.927978+00
Date Added: 2024-06-11T17:14:52.809342
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                ST. PAUL FIRE & MARINE                                     No. 81344
                INSURANCE COMPANY,
                Appellant,
                vs.
                                                                            FRE
                NATIONAL UNION FIRE INSURANCE                               DEC     8 2022
                COMPANY OF PITTSBURGH, PA.;
                                                                             IZAB   A. BROWN
                ROOF DECK ENTERTAINMENT, LLC,                                  OF

                D/B/A MARQUEE NIGHTCLUB,                                       FU   CLERK
                Res ondents.

                                          ORDER OF AFFIRMANCE

                              This is an appeal from two district court orders granting
                summary judgment, certified as final under NRCP 54(b), in an insurance
                subrogation matter. Eighth Judicial District Court, Clark County; Gloria
                Sturman, Judge.
                              Respondent Roof Deck Entertainment, L.L.C., which does
                business as Marquee Nightclub (collectively, Marquee), operates and
                manages Marquee Nightclub for a subsidiary of nonparty The Cosmopolitan
                Hotel & Casino (Cosmopolitan) pursuant to a management agreement.' In
                2014, a patron of Marquee sued Cosmopolitan and Marquee for negligent
                and intentional torts, seeking compensatory and punitive damages, after
                security members employed by Marquee injured the patron when
                attempting to oust him from the club. Marquee and Cosmopolitan tendered
                the action to Aspen Specialty Insurance Cornpany (Aspen),2 a prirnary
                insurer, and respondent National Union Fire Insurance Company of

                     1-We only recount the facts as necessary to our disposition.

                     2   Aspen is a party in this lawsuit but is not a party in this appeal.

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                       Pittsburgh, Pa. (National Union), an excess insurer, both of whom agreed
                       to jointly defend the parties. Both Aspen's and National Union's respective
                       policies narned Marquee as the insured and Cosmopolitan as an additional
                       insured. Around one month before trial, Cosmopolitan notified its primary
                       insurer, nonparty Zurich Insurance Company (Zurich), and its excess
                       insurer, appellant St. Paul Fire & Marine Insurance Company (St. Paul), of
                       its potential exposure from the lawsuit. The case ultimately proceeded to
                       trial, and the jury returned a verdict in favor of the patron for $160.5 million
                       in compensatory damages, for which Cosmopolitan and Marquee were
                       jointly and severally liable, and in favor of the patron's request for punitive
                       damages. However, before the punitive-damages stage, Aspen, National
                       Union, Zurich, and St. Paul collectively paid confidential amounts toward a
                       settlement with the patron.        National Union's and St. Paul's equal
                       contributions exhausted their respective policy limits to resolve Marquee
                       and Cosmopolitan's liability.
                                   Following the settlement, St. Paul brought this lawsuit and
                       asserted equitable and contractual subrogation claims on behalf of
                       Cosmopolitan against National Union for breach of the implied covenant of
                       good faith and fair dealing and breach of the insurance contract, as well as
                       a direct claim against National Union for equitable contribution, over
                       National Union's resolution of the patron's lawsuit. St. Paul also brought
                       statutory subrogation claims on behalf of Cosmopolitan against Marquee
                       for statutory contribution and contractual indemnification based on the
                       management agreement between Marquee and Cosmopolitan's subsidiary.
                       After National Union and Marquee separately moved for summary
                       judgment on all claims, the district court granted summary judgment based
                       on, among other reasons, its conclusion that Cosmopolitan did not suffer

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                      damages to subrogate.      The district court certified the orders granting
                      summary judgment as final under NRCP 54(b). This appeal follows.
                                   We review de novo a district court's grant of summary
                      judgment. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029
                      (2005). "Summary judgment is appropriate under NRCP 56 when.. . no
                      genuine issue of material fact exists, and the moving party is entitled to
                      judgment as a matter of law." Id. at 731, 121 P.3d at 1031. This court views
                      "the   evidence,    and   any   reasonable   inferences   drawn   from    [the
                      evidence] . . . in a light most favorable to the nonmoving party." Id. at 729,
                      121 P.3d at 1029.
                      St. Paul's equitable and contractual subrogation claims against National
                      Union are not cognizable because Cosmopolitan suffered no damages
                                   St. Paul asks us to recognize equitable and contractual
                      subrogation between equal-level excess insurers.3         Subrogation applies
                      when one party, the subrogee, involuntarily pays the obligation or loss of
                      another, the subrogor, for which a third party, wrongdoer, or otherwise is
                      eventually found to bear responsibility. See AT & T Techs., Inc. v. Reid, 109
                      Nev. 592, 595-96, 855 P.2d 533, 535 (1993). Equitable and contractual
                      subrogation "exist[] independently of' each other, insofar as equitable
                      subrogation derives from equity and contractual subrogation arises out of
                      an agreement. See id. at 596, 855 P.2d at 535. However, in either situation,
                      the subrogee acquires no greater rights than the subrogor. See Houston v.
                      Bank of Am. Fed. Say. Bank, 119 Nev. 485, 488, 78 P.3d 71, 73 (2003)
                      (describing how, in the context of mortgages, subrogation permits a
                      subrogee to "assume the same ... position" as the subrogor (internal

                             3By "equal-level insurers," we mean insurers that provide the same
                      type of coverage to a mutual insured, such as two excess insurers.
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                quotation marks omitted) (quoting Mort v. United States, 86 F.3d 890, 893
                (9th Cir. 1996))). Subrogation creates derivative rights and requires an
                underlying independent basis upon which the subrogor could have
                recovered the payment as if the subrogee had never stepped in to assume
                the loss. See Arguello v. Sunset Station, Inc., 127 Nev. 365, 368, 252 P.3d
                206, 208 (2011) (stating that under the principle of subrogation "an insurer
                that has paid a loss under an insurance policy is entitled to all the rights
                and remedies belonging to the insured against a third party" (internal
                quotations omitted) (quoting Subrogation, Black's Law Dictionary (9th ed.
                2009))).
                            We do not need to reach the scope of equitable or contractual
                subrogation here because Cosmopolitan lacks an underlying claim to
                subrogate. See Bierman v. Hunter, 988 A.2d 530, 543 (2010) (explaining
                that the subrogee's right to recover a payment via subrogation requires an
                actionable underlying claim to assert). The implied covenant of good faith
                and fair dealing in every insurance contract imposes on the insurer the duty
                to defend and the duty to indemnify every insured. Allstate Ins. Co. v.
                Miller, 125 Nev. 300, 309, 212 P.3d 318, 324 (2009). An insurer's breach of
                these duties gives rise to tort and contract liability. Id. at 308, 212 P.3d at
                324; Century Sur. Co. v. Andrew, 134 Nev. 819, 821, 432 P.3d 180, 183
                (2018). While the insurer has a "right to control settlement discussions
                and . . . litigation against the insured, the duty to defend includes the duty
                to act reasonably "during negotiations." Miller, 125 Nev. at 309, 212 P.3d
                at 324-25. This "duty to settle" requires the insurer to protect the insured
                from "unreasonable exposure to a judgment in excess of the" insured's
                liability coverage limit to the extent an opportunity to settle arises.
                Restatement of Liability Insurance § 24 cmt. b (Am. Law Inst. 2019). Breach

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                of this duty may render the insurer liable for the entire amount of the excess
                judgment, regardless of the policy's actual coverage limits. See Miller, 125
                Nev. at 313-14, 212 P.3d at 327-28; Andrew, 134 Nev. at 826, 432 P.3d at
                186. However, exhaustion of the policy limits prior to an excess judgment
                necessarily protects the insured from the harm that the duties purport to
                avoid. See Safeco Ins. Co. of Am. v. Superior Court of Contra Costa Cty., 84
                Cal. Rptr. 2d 43, 46 (Ct. App. 1999) (concluding that the "cause of action for
                bad faith refusal to settle arises only after a judgment has been rendered in
                excess of the policy limits").   Here, National Union, along with Aspen,
                Zurich, and St. Paul, guaranteed Cosmopolitan financial "security,
                protection, and peace of mind" when they settled Cosmopolitan's liability
                before excess-judgment exposure. See Ainsworth v. Combined Ins. Co. of
                Arn., 104 Nev. 587, 592, 763 P.2d 673, 676 (1988). Therefore, Cosmopolitan
                did not suffer damages which would give rise to either a bad-faith claim or
                a breach-of-contract claim. St. Paul thus lacks any claim to assert on behalf
                of Cosmopolitan against National Union.
                St. Paul's equitable contribution claim against National Union is not
                cognizable because each insurer exhausted their policy limits
                            St. Paul asks this court to recognize an equitable contribution
                claim between equal-level insurers.       Contribution allows one party "to
                extinguish joint liabilities through payment to the injured party, and then
                seek partial reimbursement" from a co-obligor "for sums paid in excess of'
                the party's "equitable share of the common liability." Doctors Co. v. Vincent,
                120 Nev. 644, 650-51, 98 P.3d 681, 686 (2004). Equitable contribution, as
                opposed to statutory or contractual contribution, applies anytime two or
                more parties "hav[e] a common obligation, either in contract or tort,"
                regardless of whether parties "signed separate" agreements. 18 Am. Jur.
                2d Contribution § 6.
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                            We     have   previously   suggested    that   Nevada     permits
                contribution claims between insurers. See Ardmore Leasing Corp. v. State
                Farm Mut. Auto. Ins, Co., 106 Nev. 513, 514-15, 796 P.2d 232, 232-33 (1990)
                (concluding that insurer was "not entitled to judgment as a matter of law"
                on its contribution and indemnity claims against other insurer because
                "Menuine issues of fact still exist[ed] as to the extent of coverage provided"
                in the insurers' policies). But we do not need to reach whether to recognize
                equitable contribution between equal-level insurers here, as St. Paul did not
                contribute a disproportionate share. Equitable contribution only allows
                reimbursement to the extent that an insurer "paid over its proportionate
                share of the obligation" compared to the other insurers, because all the
                insurers collectively and "equally" share in "their respective coverage of the
                risk." Fireman's Fund Ins. Co. v. Md. Cos. Co., 77 Cal. Rptr. 2d 296, 303
                (Ct. App. 1998) (emphasis omitted). Here, National Union and St. Paul
                undisputedly contributed their full policy limits to the settlement of the
                patron's lawsuit. St. Paul's contribution claim would effectively permit it to
                recover full reimbursement from National Union. However, contribution
                operates on the principle that the parties share equal obligation to pay the
                loss. See Doctors Co., 120 Nev. at 651, 98 P.3d at 686; see also 18 Am. Jur.
                2d Contribution § 3 (observing that contribution works to distribute a
                common burden or liability proportionate to each actor's share of
                responsibility).   Thus, St. Paul cannot seek equitable contribution from
                National Union.
                The subrogation waiver in the management agreement between Marquee
                and Cosmopolitan's subsidiary binds Cosmopolitan and prevents St. Paul's
                contractual subrogation claim against Marquee
                            St. Paul argues that a subrogation waiver in a management
                agreement between Marquee and Cosmopolitan's subsidiary does not

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                trigger an endorsement in St. Paul's excess policy with Cosmopolitan that
                waives St. Paul's right to recover via subrogation to the extent that its
                insured also waives its right to recover via subrogation. We review issues
                of contract interpretation de novo. Bielar v. Washoe Health Sys., Inc., 129
                Nev. 459, 465, 306 P.3d 360, 364 (2013).       Generally, only parties who
                Ctagree[ ] . . . to submit" to a contract remain bound by its provisions. See

                Truck Ins. Exch. v. Palmer J. Swanson, Inc., 124 Nev. 629, 634, 189 P.3d
                656, 660 (2008) (discussing enforceability of arbitration agreement against
                g`nonsignatory"). However, a nonparty who qualifies as "an intended third-
                party beneficiary" is empowered to enforce a contract against a contracting
                party. Canfora v. Coast Hotels & Casinos, Inc., 121 Nev.771, 779, 121 P.3d
                599, 604 (2005). A third-party beneficiary is a party whom the contracting
                parties "clearly" intended "to benefit" and foreseeably relies on the
                agreement. Lipshie v. Tracy Inv. Co., 93 Nev. 370, 379, 566 P.2d 819, 824-
                25 (1977).
                             Here, while Cosmopolitan is not a party to the management
                agreement between Cosmopolitan's subsidiary and Marquee, Cosmopolitan
                is a third-party beneficiary.     Even though Cosmopolitan signed the
                agreement and agreed to 20 specified provisions, a party only becomes
                bound as a party to a contract if it agrees with the other party to the
                essential terms and exchanges consideration. See Certified Fire Prot. Inc.
                v. Precision Constr., Inc., 128 Nev. 371, 378, 283 P.3d 250, 255 (2012)
                (explaining that the "meeting of the minds exists when the parties have
                agreed upon the contract's essential terms").     National Union does not
                identify any essential terms of the management agreement to which
                Cosmopolitan agreed.     However, the indemnification provision in the
                management agreement, which St. Paul seeks to subrogate on behalf of

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                Cosmopolitan, aims to protect or compensate a third party, here,
                Cosmopolitan, for losses incurred because of Marquee's actions. Thus, the
                contracting parties to the management agreement intended to benefit
                Cosmopolitan. Moreover, the management agreement expressly identifies
                Cosmopolitan as an intended third-party beneficiary with respect to any
                rights or obligations assigned, delegated, or shared by its subsidiary.
                Accordingly, Cosmopolitan is a third-party beneficiary to the management
                agreement for purposes of the indemnification provision.
                            While a third-party beneficiary enjoys "the same rights and
                remedies . . . as a promisee of the contract," 9 John E. Murray, Jr., Corbin
                on Contracts § 46.1 (2022), it also takes those rights and remedies "subject
                to any defense arising from the contract... assertible against the
                promisee," Gibbs v. Giles, 96 Nev. 243, 246-47, 607 P.2d 118, 120 (1980).
                This means that an intended third-party beneficiary's rights remain limited
                by any conditions or burdens imposed in the contract. See, e.g., Mercury
                Cas. Co. v. Maloney, 6 Cal. Rptr. 3d 647, 649 (Ct. App. 2003) (stating that a
                "third party beneficiary takes the benefits subject to the conditions and
                limitations set forth in the contract"); Mendez v. Hampton Court Nursing
                Ctr., L.L.C., 203 So. 3d 146, 149 (Fla. 2016) (stating the court "will
                ordinarily enforce an arbitration clause" against a third-party beneficiary);
                Sanders v. Am. Cas. Co. of Reading, 74 Cal. Rptr. 634, 637 (Ct. App. 1969)
                (applying one-year statute of limitations in contract to bar claim by third-
                party beneficiary to enforce contract and explaining that "the third-party
                [beneficiary] cannot select the parts favorable to him and reject those
                unfavorable to him").    Here, Cosmopolitan obtains no greater right to
                indemnification than its subsidiary and bears the same contractual burdens
                of its subsidiary.    These provisions in the management agreement

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                collectively provide that any insurance maintained by Cosmopolitan's
                subsidiary or by Cosmopolitan must contain a subrogation waiver against
                Marquee.      Indeed, Cosmopolitan's policy with St. Paul contains such a
                waiver.      St. Paul cannot enforce the benefits of the indemnification
                provision beyond what the contract provides. The subrogation waiver in the
                management agreement binds Cosmopolitan, as an intended third-party
                beneficiary, and triggers the subrogation-waiver endorsement in St. Paul's
                policy.    That waiver bars subrogation of Cosmopolitan's contractual
                indemnification claim.
                The indemnification provision in the management agreement precludes
                alternative remedies by Cosmopolitan
                              St. Paul argues, alternatively, that it may assert, via
                subrogation, a claim for contribution pursuant to NRS 17.225 against
                Marquee. NRS 17.225(1) provides a right of contribution "where two or
                more persons become jointly or severally liable in tort for the same injury
                to person or property or for the same wrongful death."           The right of
                contribution "exists only in favor of a tortfeasor who has paid more than his
                or her equitable share of the common liability," and remains "limited to the
                amount paid by the tortfeasor in excess of his or her equitable share." NRS
                17.225(2).     However, statutory contribution does not "exist[] where
                indemnity exists." Van Cleave v. Gamboni Constr. Co., 101 Nev. 524, 529,
                706 P.2d 845, 848 (1985) (emphasis omitted); see also NRS 17.265. "When
                the duty to indemnify arises from contractual language, it generally is not
                subject to equitable considerations; 'rather, it is enforced in accordance with
                the terms of the contracting parties' agreement.'          Reyburn Lawn &
                Landscape Designers, Inc. v. Plaster Dev. Co., 127 Nev. 331, 339, 255 P.3d
                268, 274 (2011) (quoting Prince v. Pac. Gas & Elec. Co., 202 P.3d 1115, 1120
                (Cal. 2009)). "Nevada has not adopted an anti-indemnity statute," thus
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                Ftparties have great freedom in allocating indemnification responsibilities

                between one another." Id. Accordingly, we enforce contractual-indemnity
                provisions on their terms so long as they use sufficiently "clear and
                unequivocal" language. Id. at 339-40, 255 P.3d at 274-75. As noted above,
                Marquee, Cosmopolitan's subsidiary, and Cosmopolitan contracted for
                Marquee to indemnify Cosmopolitan for certain losses.       Neither of the
                parties challenge the indemnification provision's language as unclear or
                equivocal. It is thus enforceable and is mutually exclusive of a right to
                contribution.   Accordingly, Cosmopolitan lacks a contribution claim to
                subrogate. See Bierman, 988 A.2d at 543 (explaining that the subrogee's
                right to recover a payment via subrogation requires an actionable
                underlying claim to assert).
                            Accordingly, we
                             ORDER the judgment of the district court AFFIRMED.4

                                                  tet—AA                       , C.J.
                                                  Parraguirre

                                                                                  J.
                                                  Hardesty

                                                      CALIZA
                                                  Pickering

                                                                                  J.
                                                  Herndon

                      4The Honorable Abbi Silver having retired, this matter was decided
                by a six-justice court.

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                CADISH, J., with whom, STIGLICH, J., agrees, concurring in part and
                dissenting in part:

                            This case raises a question of first impression regarding the
                circumstances under which an insurer may subrogate its insured's bad-faith
                and breach-of-contract claims against another insurer.         Rather than
                address this question, the majority, in my view, misapplies basic precepts
                of subrogation to dismiss St. Paul's equitable and contractual subrogation
                claims against respondent National Union.         The majority holds that
                exhaustion of the policy limits by the four involved insurers avoided any
                damages to St. Paul's insured, and therefore, precluded subrogation by St.
                Paul. In so holding, the majority misconstrues the nature of St. Paul's
                payment on behalf of its insured.         Because the payment reflects the
                insured's damages and subrogates St. Paul to its insured's claims against
                National Union, I cannot agree with the majority's decision today.          I
                therefore dissent in part.5
                            As the majority correctly outlines, subrogation only creates
                derivative rights: it permits the paying party, or subrogee, to step into the
                shoes of the injured party, or subrogor, and pursue recovery from the
                responsible third-party wrongdoer to the extent that the subrogor possesses
                a cognizable claim against that third party. See Chubb Custom Ins. Co. v.
                Space Sys./Loral, Inc., 710 F.3d 946, 957 (9th Cir. 2013).        Thus, the
                subrogee's recovery under subrogation principles requires that the
                subrogor's loss remains independently recoverable from the third party
                whose actions caused the loss, as if the subrogee had never stepped in to

                      51 concur with the rest of the majority's order affirming the district
                court's dismissal of St. Paul's contribution claim against National Union
                and dismissal of St. Paul's subrogation claims against Marquee.
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                assume the loss. See id. (describing subrogation as "a purely derivative
                right—meaning that the subrogee succeeds to rights no greater than those
                of the subrogor"); see also Bierman v. Hunter, 988 A.2d 530, 543 (Md. Ct.
                Spec. App. 2010) (explaining that because the subrogee "can exercise no
                right[s]" greater than the subrogor, "subrogation 'requires an underlying
                and independent legal basis upon which a party may assert its claims"
                (internal alterations and emphasis omitted) (quoting Hill v. Cross Country
                Settlements, L.L.C., 936 A.2d 343, 362, 363 (Md. 2007))), superseded on other
                ground.s by Md. Rule 14-305 as discussed in Bates v. Cohn, 9 A.3d 846, 858
                (Md. 2010).
                              In   applying   these   principles,   I   believe   the   majority
                misconstrues applicable law. The majority concludes that St. Paul lacks a
                cognizable claim to which to subrogate because the insurers, including St.
                Paul, collectively exhausted their policy limits towards a settlement of
                Cosmopolitan's liability post-verdict, but prejudgment.           The majority
                reasons that, consequently, the insurers' settlement avoided any out-of-
                pocket expenses or damages to Cosmopolitan. It is true that, in the literal
                sense, Cosmopolitan never suffered damages because of St. Paul's
                settlement contribution (and by extension, the fortuity that Cosmopolitan
                obtained more than one applicable policy). However, such reasoning fails
                to recognize that subrogation substitutes the parties as if the subrogee had
                never assumed the subrogor's loss. See Arguello v. Sunset Station, Inc., 127
                Nev. 365, 368-69, 252 P.3d 206, 208 (2011) (discussing that full payment
                subrogates the insurer to the insured's claims against the third-party
                wrongdoer that arose before the payment occurred); Wimer v. Pa. Emps.
                Benefit Tr. Fund, 939 A.2d 843, 853 (Pa. 2007) (agreeing that because "a
                subrogee must first tender payment... before a right to subrogation

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                accrues, subrogation c, presupposes a payment by the subrogee to" or on
                behalf of "the subrogor"). In the legal sense, "[p]ayment by the insurance
                company does not change the fact a loss has occurred," and instead, reflects
                the loss suffered by the insured. Troost v. Estate of DeBoer, 202 Cal. Rptr.
                47, 50 (Ct. App. 1984). As the California Court of Appeals explained in
                addressing an insurer's subrogation claim,
                            The only reason [the insured] had no out-of-pocket
                            expense was because its insurer, now seeking
                            subrogation, made the payment. Under [the] view
                            [that the insurer's payment obviated damages], no
                            insurer could ever state a cause of action for
                            subrogation in order to recover amounts it paid on
                            behalf of its insured, because of the very fact that it
                            had paid amounts on behalf of its insured. Not only
                            is this illogical, [but also] it contradicts decades of
                            cases consistently holding that an insurer may be
                            equitably       subrogated       to    its    insured's
                            indemnification claims.
                Interstate Fire & Cas. Ins. Co. v. Cleveland Wrecking Co., 105 Cal. Rptr. 3d
                606, 615 (Ct. App. 2010) (emphasis omitted).
                            Under this subrogation principle, Cosmopolitan, the subrogor,
                would have unquestionably been subject to liability for the remaining
                amount of the settlement if St. Paul, the subrogee, had not paid its
                contribution towards the settlement in accordance with Cosmopolitan's
                insurance policy. And assuming the truth of St. Paul's allegations, as we
                must at the motion-to-dismiss stage, see Buzz Stew, LLC v. City of North
                Las Vegas, 124 Nev. 224, 228, 181 P.3d 670, 672 (2008) (treating factual
                allegations in a complaint "as true" and drawing inferences in the plaintiff s
                favor on a motion to dismiss for failure to state a claim for relief), National
                Union, the third party, caused the settlement to exceed its policy limits by
                its breach of the contract- and tort-based duty to settle, see Hamada v. Far

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                         E. Nat'l Bank, 291 F.3d 645, 649 (9th Cir. 2002) (explaining that the
                         derivative claim lays against the third-party wrongdoer who caused the
                         subrogor's loss). According to the complaint, National Union took control of
                         the litigation against Cosmopolitan and rejected several offers to settle
                         liability below or at its policy limits, despite its own retained counsel's
                         assessment of the damages at over 10 times the amount of National Union's
                         policy limits. Only after the jury rendered an excess verdict six times the
                         policy limits did National Union finally orchestrate a settlement of
                         Cosmopolitan's liability in excess of its policy limits.     Accepting these
                         allegations as true, had Cosmopolitan, rather than St. Paul, paid the
                         remaining    portion   of   the   settlement,   Cosmopolitan     could   have
                         independently sued National Union to recover those damages under breach-
                         of-contract and bad-faith theories.° See Century Sur. Co. v. Andrew, 134
                         Nev, 819, 821, 432 P.3d 180, 183 (2018) (recognizing contract liability for
                         breach of the duty to defend); Allstate Ins. Co. v. Miller, 125 Nev. 300, 309,
                         212 P.3d 318, 324 (2009) (recognizing insurer's duty to act reasonably
                         during settlement negotiations as derived from insurer's duty to defend).
                         Ultimately, St. Paul covered Cosmopolitan's exposure that exceeded
                         National Union's policy limits. But the very fact of St. Paul's payment does

                               °Contrary to the majority's position, we have said that exhaustion of
                         policy limits does not automatically foreclose an insured's damages under
                         breach-of-contract or bad-faith theories. See Andrew, 134 Nev. at 825-26,
                         432 P.3d at 185-86 (holding that, in the context of an excess judgment,
                         breach of the insurance contract subjects an insurer to liability for
                         expectation and consequential damages, which may exceed the policy
                         limits); cf. Miller, 125 Nev. at 314, 212 P.3d at 327-28 (explaining that, in
                         the context of an excess judgment, an insurer's breach of the duty to settle
                         subjects it to "all compensatory damages proximately caused by its breach,"
                         which may exceed the policy limits).
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                     not negate Cosmopolitan's loss; instead, St. Paul became subrogated to
                     Cosmopolitan's independently cognizable claims against National Union for
                     the amount of its payment on behalf of Cosmopolitan.
                                 Because I believe a subrogatable loss exists, I would go one step
                     further and address whether to recognize subrogation between equal-level
                     insurers under the circumstances presented. While we have not previously
                     recognized subrogation in this context, we have consistently "balance[d] the
                     equities based on the facts and circumstances of each particular case" and
                     applied subrogation to the extent necessary to "grant an equitable result
                     between the parties." Am. Sterling Bank v. Johnny Mgmt. LV, Inc., 126
                     Nev. 423, 428, 245 P.3d 535, 538 (2010) (internal quotation marks omitted).
                     Moreover, many courts recognize equitable subrogation of the insured's bad-
                     faith and breach-of-contract claims between insurers, albeit between
                     primary and excess insurers. See, e.g., Hartford Acc. & Indem. Co. v. Aetna
                     Cas. & Sur. Co., 792 P.2d 749, 754 (Ariz. 1990) (permitting excess insurer
                     to subrogate to rights of insured against primary insurer for primary
                     insurer's bad-faith "failure to settle within policy limits"); Com. Union
                     Assurance Cos. v. Safeway Stores, Inc., 610 P.2d 1038, 1041 (Cal. 1980)
                     (same); Preferred Profl Ins. Co. v. Doctors Co., 419 P.3d 1020, 1028 (Colo.
                     App. 2018) (same); Home Ins. Co. v. N. River Ins. Co., 385 S.E.2d 736, 740
                     (Ga. Ct. App. 1989) (same); Com. Union Ins. Co. v. Med. Protective Co., 393
                     N.W.2d 479, 483 (Mich. 1986) (same); Cont'l Cas. Co. v. Reserve Ins. Co., 238
                     N.W.2d 862, 864 (Minn. 1976) (same); Me. Bonding & Cos. Co. v. Centennial
                     Ins. Co., 693 P.2d 1296, 1300 (Or. 1985) (same).       While none of these
                     decisions, nor any of the decisions relied on by the parties, addressed
                     subrogation of an insured's bad-faith and breach-of-contract claims by one
                     excess insurer against another equal-level excess insurer, our case law

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(0) I947A   .2610.
                directs courts to balance the equities before they decide or decline to apply
                subrogation to a given circumstance. Because I see no sound reason to
                depart from that principle here, I would recognize in appropriate situations
                the availability of subrogation between two excess insurers, and I therefore
                view the district court's decision foreclosing such a possibility as erroneous.
                            The majority, however, sidesteps the issue of subrogation
                between two excess insurers and instead concludes that Cosmopolitan
                suffered no damages based on the settlement payment by the insurers that
                resolved its personal liability. I cannot agree that Cosmopolitan suffered
                no damages by virtue of the insurers' exhaustion of their policy limits, as
                such a conclusion misapplies a fundamental presupposition of subrogation
                that the subrogee insurer's payment reflects the subrogor insured's loss. I
                therefore dissent in part.

                                                                                    J.
                                                     Cadish

                I concur:

                      Al;%,st.L.0               J.
                Stiglich

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(th 1947A
                cc:   Hon. Gloria Sturman, District Judge
                      Lansford W. Levitt, Settlement Judge
                      Hutchison & Steffen, LLC/Reno
                      Hutchison & Steffen, LLC/Las Vegas
                      Lewis Roca Rothgerber Christie LLP/Las Vegas
                      Herold & Sager/Las Vegas
                      Keller/Anderle LLP/Irvine
                      Eighth District Court Clerk

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if)) 1947A