OHIO SECURITY INSURANCE COMPANY OHIO CASUALTY INSURANCE COMPANY PEERLESS INDEMNITY INSURANCE COMPANY AND WEST AMERICAN INSURANCE COMPANY v. MINOR CHILD INDIVIDUALLY BRYAN GALLAGHER AS GUARDIAN AD LITEM OF CAMILLE GALLAGHER AS GUARDIAN AD LITEM OF KEITH HALEY INDIVIDUALLY JEREME BOTIZ INDIVIDUALLY JAMES HU INDIVIDUALLY RICHARD BELSKY INDIVIDUALLY YVONNE ARNONE INDIVIDUALLY PATRICIA SUTHERLAND AS HEIR OF KATHLEEN MUSTAIN RYERSON DECEASED JUDITH BEAUMIER IN HER CAPACITY AS ADMINISTRATRIX OF THE ESTATE OF RICHARD RYERSON DECEASED AS HEIR OF KATHLEEN MUSTAIN RYERSON DECEASED AND JUDITH RYERSON IN HER CAPACITY AS SPECIAL ADMINISTRATIX OF THE ESTATE OF KATHLEEN RYERSON AND AS HEIR OF KATHLEEN MUSTAIN RYERSON DECEASED (2025)

ORDER GRANTING PETITION

This is a petition for a writ of mandamus challenging a district court order denying a motion to sever a third-party complaint. The underlying case in this matter is a products liability suit (the “Gallagher action”) filed by injured plaintiffs (the real parties in interest in this petition) against defendants Affinitylifestyles.com d/b/a Real Water and related entities (collectively, “Real Water Defendants”¹ ) for producing, selling, and distributing bottled water that was allegedly contaminated due to a failure in the purification system. Petitioners are various insurance companies that provide coverage for the Real Water Defendants.

The real parties in interest (RPIs) filed their complaint against the Real Water Defendants in May 2021, the case proceeded to jury trial, and RPIs obtained a verdict in their favor on November 1, 2023. RPIs then filed a third-party complaint against petitioners, asserting claims for intentional interference with contract and intentional interference with prospective economic advantage, based on petitioners’ actions in Real Water's bankruptcy proceedings. Petitioners initially removed the action to bankruptcy court; however, the case was remanded back to state court, at which time petitioners moved to sever these claims, asserting that they were not proper third-party claims under NRCP 14. The district court denied the motion, finding that petitioners were proper third-party defendants, that severance was not warranted, and that petitioners waived the issue of severance by untimely filing their motion to sever. Petitioners now seek a writ of mandamus.

We elect to entertain the writ petition

The decision to consider a petition for a writ of mandamus is purely discretionary with this court. Smith v. Eighth Jud. Dist. Ct., 107 Nev. 674, 677, 818 P.2d 849, 851 (1991). Writ relief is an extraordinary remedy available only in extraordinary circumstances, and is appropriate only when there is no “plain, speedy and adequate remedy in the ordinary course of law.” Archon Corp. v. Eighth Jud. Dist. Ct., 133 Nev. 816, 819, 407 P.3d 702, 706 (2017). (internal quotation marks omitted). When a district court enjoys discretion on a particular issue, this court “can issue traditional mandamus only where the lower court has manifestly abused that discretion or acted arbitrarily or capriciously.” Walker v. Second Jud. Dist. Ct., 136 Nev. 678, 680, 476 P.3d 1194, 1196 (2020). Mandamus relief is not appropriate where a district court's discretionary decision is the result of a “mere error in judgment; instead, mandamus is only available where the law is overridden or misapplied, or when the judgment exercised is manifestly unreasonable or the result of partiality, prejudice, bias or ill will.” Id. at 680-81, 476 P.3d at 1197 (internal quotation marks omitted). Because we find that the district court manifestly abused its discretion in allowing the third-party complaint to proceed, we elect to entertain this writ petition.

Petitioners argue that the district court erred in denying their motion to sever because (1) the motion to sever was timely filed and (2) the third-party complaint was improper under NRCP 14. We address each argument in turn.

The district court abused its discretion in finding the motion to sever was untimely

In its order denying petitioners’ motion to sever, the district court concluded that petitioners waived their right to seek severance as their motion was filed 11 months after being joined as third-party defendants. Petitioners argue that the district court abused its discretion in finding the motion untimely because the removal proceedings in federal court stripped the state court of jurisdiction until the case was remanded, and the motion to sever was filed within 14 days of the remand order. We agree.

When a case is removed from state court to federal court, “the State court shall proceed no further unless and until the case is remanded.” 28 U.S.C. § 1446(d). Once the case is remanded to state court, NRCP 81(c) provides that within 14 days after service of written notice of entry of the remand order, “a defendant may move or plead as it might have done had the action not been removed.”

Here, the case was remanded on September 27, 2024, and petitioners filed their motion to sever the complaint 12 days later on October 9, 2024. Because the motion to sever was filed within the 14-day period prescribed in NRCP 81(c), the motion was timely. Accordingly, we conclude that the district court manifestly abused its discretion when it found the motion to sever to be untimely.

The third-party complaint was improper under NRCP 14

Petitioners argue that the district court erred when it concluded that the third-party complaint was proper under NRCP 14. Petitioners assert that, because RPIs did not have a claim asserted against them for which petitioners were or might be liable, a third-party complaint was not available and the claims should have been filed as a separate action. As characterized by petitioners, the Gallagher action arose from personal injuries sustained from contaminated drinking water, whereas the third-party action arose from conduct that occurred during litigation in bankruptcy court and concerned an insurance coverage dispute.

This court reviews a district court's interpretation of the Nevada Rules of Civil Procedure de novo. Moseley v. Eighth Jud. Dist. Ct., 124 Nev. 654, 662, 188 P.3d 1136, 1142 (2008). NRCP 14(a)(1) states that “[a] defending party may, as third-party plaintiff, file a third-party complaint against a nonparty, the third-party defendant, who is or may be liable to it for all or part of the claim against it.” NRCP 14(b) provides that “[w]hen a claim is asserted against a plaintiff, the plaintiff may bring in a third party if this rule would allow a defendant to do so.” Thus, for a plaintiff to bring in a third party, a claim must be asserted against the plaintiff and the third party must be potentially liable to the plaintiff for all or part of that claim. NRCP 14(a)(1). A third-party complaint is limited to claims based upon theories of contribution and indemnity. See Lund v. Eighth Jud. Dist. Ct., 127 Nev. 358, 362, 255 P.3d 280, 283 (2011) (stating that the third-party rule is reserved for claims based on indemnity); Pack v. LaTourette, 128 Nev. 264, 269, 277 P.3d 1246, 1249 (2012) (stating that NRCP 14(a) allows a third-party complaint based on contribution).

The district court found RPIs’ third-party complaint proper under NRCP 14 because petitioners are the defendants’ insurers and thus may be liable for the Gallagher action judgment. However, the law cited by the district court pertains to when a defendant may implead its own liability insurer and does not allow for a plaintiff to implead a defendant's insurer. Instead, for a plaintiff to bring a third-party claim against the defendant's insurer, the plaintiff must show that the insurer is liable to the plaintiff for a claim against the plaintiff.

There have been no claims brought against RPIs in the underlying case. RPIs assert that “Real Water sued [RPIs] months before the [third-party complaint] was filed.” However, it appears that RPIs are referring to an injunction that Real Water brought against RPIs in the bankruptcy action. The parties assert that the injunction was voluntarily dismissed on October 24, 2023—nine days before the third-party complaint was filed against petitioners. The injunction is not a “claim asserted against [the] plaintiff’ for purposes of Rule 14, as it is not a claim asserted by a party in the Gallagher action. Furthermore, the third-party claims brought by RPIs against petitioners do not seek contribution or indemnity, but rather are direct claims that must be filed in a separate action. Accordingly, we conclude that the district court erred in finding that the third-party complaint was proper under NRCP 14.

The district court abused its discretion by not severing the action under NRCP 21

This court reviews a district court's decision on a motion to sever for an abuse of discretion. A Cab, LLC v. Murray, 137 Nev. 805, 817, 501 P.3d 961, 973 (2021). The following factors must be considered in deciding whether severance is proper under NRCP 21:

(1) whether the claims arise out of the same transaction or occurrence;

(2) whether the claims present some common questions of law or fact;

(3) whether settlement of the claims or judicial economy would be facilitated;

(4) whether prejudice would be avoided if severance were granted; and

(5) whether different witnesses and documentary proof are required for separate claims.

Id. at 817-818, 501 P.3d at 974 (adopting the factors set out in Parchman v. SLM Corp., 896 P.3d 728, 733 (6th Cir. 2018), in regard to the federal analog of NRCP 21).

In its order denying severance, the district court did not detail its analysis of the A Cab factors, instead simply stating “this Court has relied upon ․ and considered the 5 factors set forth [in A Cab], and determined that each of the factors weigh against severance.” Because the district court did not articulate its reasoning, we are unable to ascertain its rationale for concluding that the five factors weighed against severance.

Further, a review of the record appears to belie the district court's ruling. For instance: petitioners argue that the claims do not arise out of the same transaction or occurrence. We agree. In the context of permissive counterclaims, this court has held that “the relevant consideration is whether the pertinent facts of the different claims are so logically related that issues of judicial economy and fairness mandate that all issues be tried in one suit.” Mendenhall v. Tassinari, 133 Nev. 614, 621, 403 P.3d 364, 371 (2017). The third-party complaint contains claims for intentional interference with contract and intentional interference with prospective economic advantage. Both of these claims arise from a settlement agreement petitioners entered into with the trustee for the Real Water bankruptcy action. The Gallagher action, however, arose from personal injuries suffered following consumption of contaminated drinking water. Thus, the pertinent facts for the different claims are not so logically related as to deny severance.

Petitioners additionally contend that the claims do not present any common questions of law or fact. Again, we agree. The facts relevant to the Gallagher action concern contamination of the water and damages related to consumption of the water. These facts are not relevant to the third-party interference claims against petitioners. Similarly, the questions of law are distinct between the products liability and personal injury claims and the intentional interference claims.

Concerning the third factor, the Gallagher action resulted in a judgment pursuant to a jury verdict and is currently on appeal with this court. The third-party complaint giving rise to this petition is still in the beginning stages of litigation. And, the two actions contain different claims and defenses. Accordingly, severance would help facilitate settlement better than maintaining a single action.

Additionally, petitioners are prejudiced by not severing the action as they are stepping into this action after many years of active litigation. To deny severance would force petitioners to adhere to existing stipulations, the appointment of a discovery referee, and likely deny due process, as the Gallagher action has already resulted in a judgment.

Finally, the witnesses and discovery documents are distinct between the Gallagher action and the third-party complaint. Aside from the fact that petitioners are insurance providers for Real Water, none of the witnesses for the products liability action are relevant in determining petitioners’ interference with contract and prospective economic advantages. Again, this factor weighs in favor of severance. Thus, the record clearly demonstrates that the A Cab factors weigh in favor of severance. Accordingly, we conclude the district court abused its discretion in denying petitioners’ motion to sever. We therefore

ORDER the petition GRANTED AND DIRECT THE CLERK OF THIS COURT TO ISSUE A WRIT OF MANDAMUS instructing the district court to vacate its order denying petitioners’ motion to sever the third-party complaint and to enter an order granting the motion.

Pickering, J.

Cadish, J.

Lee, J.

FOOTNOTES

1.   “Real Water Defendants” will be used to refer to all defendants collectively, but “Real Water” will be used to refer to Affinitylifestyles.com d/b/a Real Water, the producer of the bottled water.