United States District Court, D. Nevada
REPORT AND RECOMMENDATION
Hoffman, Jr., United States Magistrate Judge
before the court is Defendants J. Scott MacDonald
(“MacDonald”) and MacDonald & Associates,
Ltd.'s (“M&A”) Motion for Determination
of Good Faith Settlement (ECF No. 30), filed on February 27,
2017. The court ordered supplemental briefing on this motion,
which was filed on March 23, 2017. (Order (ECF No. 32); Supp.
Briefing (ECF Nos. 33, 34).) Plaintiff First American Title
Insurance Company (“First American”) does not
oppose the motion. (Notice of Non-Opp'n (ECF No.
parties are familiar with the facts of the case and the court
will repeat them only as necessary. This cases arises out of a
real estate transaction involving property located at 5302
Mountain Foliage Drive in Las Vegas, Nevada. The property,
which was encumbered by two deeds of trust, was purchased in
a short sale transaction in 2013. Title to the property was
transferred to the buyer although the banks holding the deeds
of trust were not paid. The property was sold again in late
2013. The bank holding the first deed of trust subsequently
began foreclosure proceedings. First American, which issued a
title insurance policy in connection with the second sale,
ultimately paid a title insurance claim related to the
outstanding encumbrances. First American subsequently brought
this case alleging subrogation claims based on theories of
negligence, among others, against M&A, MacDonald,
Lori Allen-Cook,  Spencer Judd, MacDonald & Judd, Ltd.,
and Nevada Short Sale Services, LLC,  who were involved in the
short sale transaction.
not the only case against MacDonald and M&A related to
short-sale activities. Wells Fargo sued MacDonald, M&A,
and Ms. Allen-Cook in a separate state court case. The state
court case was jointly mediated with this case with a private
mediator, resulting in a combined settlement that implicates
the policy limits of M&A's applicable insurance
policy. MacDonald and M&A now seek a determination that
their settlement with First American in this case is made in
good faith under Nevada Revised Statutes § 17.245(1)(b)
and in satisfaction of the factors set forth in In re MGM
Grand Hotel Fire Litigation, 570 F.Supp. 913 (D. Nev.
17.245 states in relevant part:
When a release or a covenant not to sue or not to enforce
judgment is given in good faith to one of two or more persons
liable in tort for the same injury or the same wrongful
. . .
(b) It discharges the tortfeasor to whom it is given from all
liability for contribution and for equitable indemnity to any
Nev. Rev. Stat. § 17.245(1). Equitable indemnity is
“a right of indemnity that is created by the court
rather than expressly provided for in a written
agreement.” Id. at § 17.245(2). The
purpose of the statute is “to encourage settlements by
discharging all liability for contribution by a settling
tortfeasor to others upon a finding that the settlement was
entered in ‘good faith.'” In re MGM Grand
Hotel Fire Litig., 570 F.Supp. 913, 926-27 (D. Nev.
1983). The statute also protects non-settling defendants
“because the non-settling defendant receives a credit
in the amount contributed by the settling defendant in any
subsequent verdict against that defendant.”
Id. at 927; Nev. Rev. Stat. § 17.245(1).
within the court's discretion “to consider the
fairness and overall appropriateness of the proposed
settlement” under § 17.245. Duk v. MGM Grand
Hotel, Inc., 320 F.3d 1052, 1060 (9th Cir. 2003).
Factors to be considered by the court in making this
assessment include “the amount paid in settlement, the
allocation of the settlement proceeds among plaintiffs, the
insurance policy limits of settling defendants, the financial
condition of settling defendants, and the existence of
collusion, fraud or tortious conduct aimed to injure the
interests of non-settling defendants.” Otak Nevada,
LLC v. Eighth Jud. Dist. Ct., 312 P.3d 491, 496 (Nev.
2013); In re MGM Grand Hotel Fire Litig., 570
F.Supp. at 927.
reviewed and considered the parties' arguments, and
weighing the In re MGM Grand Hotel Fire Litigation
factors, the court in its discretion makes the following
findings and recommendations:
1. The amount paid (which the court has reviewed in camera)
in settlement of all claims asserted by First American in
this case, except for the claims against Ms. Allen-Cook, is
more than half of the amount claimed by First American. This
is a case where M&A has denied all allegations of
2. First American is the only plaintiff in this case, and the
entire amount is being paid to First American.
3. The court has reviewed, in camera, M&A's insurance
policy limits. Significantly, the insurance policy is a
“burning limits” policy, meaning that defense
costs erode the policy limits. Between the state court case
and this case being settled, the vast ...