The Nevada Supreme Court upheld its ban on filing malpractice claims with third parties, ruling Thursday that an attorney’s client is barred from releasing the results of the lawsuit.
“Because parties may use statutory malpractice claims as bargaining chips in settlement negotiations, as occurred here, we conclude that public policy prevent the award of a tort claim against an adversary in an underlying lawsuit,” the 3-0 ruling.
The decision affirmed in part a ruling by the Eighth District Court in Clark County, but reversed the trial court on one issue. The Supreme Court ruled that Christopher Beavor could still pursue a criminal action against his former attorney, Joshua L. Tomsheck, even though it set aside the release of the results of the trial.
The dispute that led to the malpractice claim began 10 years ago when Yacov Hefetz loaned $2.2 million to Toluca Lake Village, LLC to finance the sale of a commercial property. Beavor used a collateral agreement on his own home to secure the loan.
Toluca Lake Village filed for bankruptcy. Beavor never paid the debt.
Hefetz filed a lawsuit, but the judge returned a verdict for Beavor. Hefetz hired a new attorney, who filed a motion for a new trial. Beavor also has a new lawyer; he hired Tomsheck to represent him.
Tomsheck responded to Hefetz’s motion for a new trial by filing a brief and arguing only that the motion was untimely. He presented no other arguments.
Judge James Crockett ruled that Hefetz’s motion for a new trial was timely and granted a new trial because Tomscheck did not present a substantial argument in the motion.
Beavor and Hefetz agreed to a settlement agreement in 2013. Beavor agreed to pay Hefetz $300,000 and drop the defamation suit against Tomsheck. He also sent the results of that trial to Hefetz. The agreement stipulated that Hefetz’s attorney, H. Stan Johnson, would be prosecuted for the crime.
The Nevada Supreme Court first ruled in 1982 that a client cannot waive his right to file a malpractice claim with a third party because it creates an incentive to file a claim with their attorney and sell to the highest bidder, even if they don’t have merit. The opinion said the high courts in Connecticut, Washington, and Indiana have reached similar decisions.
However, in the opinion of the Nevada court, it has not been decided whether the results of a judgment, not the judgment itself, can be sent to a third party.
Beavor argued that his settlement agreement was not barred by previous rulings because he still had control of the trial, including decisions on how to settle the case.
The Supreme Court held that the trial court was correct in concluding that Beavor’s award of benefits was invalid because it violated the public policy that precluded such provision.
“Even if Beavor did not allege tortious conduct for Hefetz’s benefit, the statutory tort claim was useful as a bargaining chip,” the opinion said.
But the Supreme Court said the trial court erred in concluding that Beavor waived his right to bring a tort action against Tomsheck because the settlement agreement gave Hefetz an “unalienable right” to the results.
Beavor pointed to a number of court decisions that preserve an attorney’s client’s right to pursue a malpractice case even if the court determines that the results were improperly presented. The Supreme Court agreed.
“We therefore hold that a statutory malpractice claim is directed to the consumer, and that invalid assignment, by itself, does not preclude an injured consumer from pursuing a malpractice claim at the legal side of the job is divided,” he said.
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