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Western National Insurance Group v. Hanlon

United States District Court, D. Nevada

December 27, 2017

WESTERN NATIONAL INSURANCE GROUP, Plaintiffs,
v.
CARRIE M. HANLON, ESQ., et al., Defendants.

          ORDER

         Presently before the court is defendants Carrie Hanlon and Morris, Sullivan, Lemkul & Pitegoff's motion to reconsider. (ECF No. 17). Plaintiff filed a response (ECF No. 19), to which defendants replied (ECF No. 25).

         Also before the court is defendants' motion to dismiss. (ECF No. 8). Plaintiff Western National Insurance Group filed a response (ECF No. 11), to which defendants replied (ECF No. 13).

         Also before the court is defendants' motion for leave to file supplemental brief. (ECF No. 27). Plaintiff filed a response (ECF No. 30), to which defendants replied (ECF No. 32).

         I. Background

         The present legal malpractice dispute arises out of a slip-and-fall action litigated in state court.[1] On January 2, 2013, non-party Tammy Herbster allegedly slipped and fell on the sidewalk of Desert Linn Spanish Gardens (“Desert Linn”) at 348 Sunward Drive in Henderson, Nevada. (ECF No. 1). Desert Linn had a landscape maintenance agreement with Classic Landscapes, LLC. Id. Classic Landscapes was insured by Western National Mutual Insurance company. Id.

         Herbster filed a complaint against Desert Linn in state court. Id. Desert Linn filed a third-party complaint against Classic Landscapes. Id. Thereafter, Western National contacted defendants Carrie Hanlon and Morris, Sullivan, Lemkul & Pitegoff (“MSLP”) regarding representing Classic Landscapes in the dispute. Id. Defendants accepted the representation, and served as counsel in the state matter. Id.

         On November 10, 2015, Herbster's counsel served an offer of judgment on Classic Landscapes valued at $1 million. Id. On November 20, 2015, Herbster's counsel served Classic Landscapes with written discovery including interrogatories, requests to produce, and requests for admission. Id. Responses to the request for admissions were due before December 20, 2015. Id. However, defendants did not timely respond to plaintiff's request for admissions.[2] Id.

         On January 5, 2016, Herbster's attorney filed a motion for summary judgment based on the unanswered requests for admissions, which counsel argued were deemed admitted under Nevada Rule of Civil Procedure 26. Id. On January 6, 2016, defendants prepared and served responses to the requests. Id. According to plaintiff, “[d]efendants denied key requests which, if admitted, could lead to a finding of liability.” Id. Defendants did not inform Western National or Classic Landscapes of their failure to meet the deadline or any potential consequences thereof, and “never sought judicial relief from the failure to timely answer discovery.” Id.

         Plaintiff further alleges that during this period of time defendants committed numerous acts that could support a legal malpractice claim: defendants failed to properly apprise plaintiff or Classic Landscapes of the status of the case; defendants failed to provide either party with a liability analysis to help the parties understand the potential exposure to liability and whether to agree to any of the settlement offers provided by Herbster's attorney, and defendants did not inform plaintiff or Classic Landscapes of requests to engage in mediation from Herbster's attorney. Id.

         On January 13, 2016, Herbster's counsel withdrew the motion for summary judgment without prejudice to re-file. Id. Thereafter, the parties proceeded with limited discovery. Id. During this time, defendant Hanlon ended her employment with MSLP. Id. Hanlon advised plaintiff that “[w]hile the file stayed with the law firm, [she] would take the case with her once she found a new firm with which to practice.” Id. On March 24, 2016, MSLP moved to withdraw from the case. Id. On April 5, 2016, defendant Hanlon emailed plaintiff, stating that she had begun working again and would serve as plaintiff's counsel. Id. On April 11, 2016, Hanlon informed plaintiff that Hanlon could no longer work on the case. Id. An unspecified law firm took over the case. Id.

         On April 11, 2016, Herbster's counsel re-filed a motion for summary judgment based on the deemed request for admissions. Id. On May 17, 2016, the state court granted Herbster's motion for summary judgment based on the deemed admissions. Id. Western National and Classic Landscapes' substituted counsel filed a motion for reconsideration, which the court denied. Id. After the parties received another time limit demand from Herbster's counsel, plaintiff and Classic Landscapes decided to settle the case for $1.5 million. Id.

         On March 21, 2017, plaintiff filed a complaint in this court. Id. Plaintiff asserts three causes of action: (1) breach of fiduciary duty; (2) breach of contract; (3) legal malpractice. Id.

         On April 14, 2017, defendants filed a motion to stay the case. (ECF No. 9). Defendants asserted that they were appealing the state district court's grant of summary judgment to the Nevada Supreme Court. Id. Defendants argued that the instant federal case should be stayed pending the outcome of the state litigation, as a claim for legal malpractice is not ripe if an appeal is pending in the underlying case. Id.

         On May 30, 2017, Magistrate Judge Hoffman denied the motion to stay. (ECF No. 15). The court held that a malpractice claim is not always premature in cases where an appeal is pending in the underlying case, and focused on the importance of whether the appeal would negate the damages award in the case. Id. The court held that because a settlement has already been reached in this case and the appeal will not affect the settlement, “WNI's alleged damages are fixed at the amount of the settlement. Their malpractice claim is therefore ripe for adjudication.” Id.

         II. Legal Standard

         a. Motion to reconsider

         A district judge may affirm, reverse, or modify, in whole or in part, a magistrate judge's order, as well as ...


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