Three days ago, the Nevada Supreme Court released an opinion in the case of Weddell v. Sharp et al. (Here). Although it has facts that would make ADR & Civ Pro professors fairly swoon, the opinion itself is maddening. Both the majority and the dissent.
Based on reading the opinion, I understand the basic dispute to have been as follows:
Weddell and Stewart were business partners, and they ran into a set of disputes. “The partners agreed to informally settle their disputes by presenting them to a panel of three attorneys.” That panel issued a decision that was largely “favorable to Stewart.” Stewart sought to enforce that decision by seeking a declaratory judgment of the validity of the part of the panel’s decision that was favorable to Stewart. Weddell opposed that action and filed a counterclaim in which he alleged bias on the part of the panel, and sought a declaratory judgment upholding the validity of the portion of the panel’s decision that was favorable to Weddell. During trial, Weddell gave up, conceded judgment in favor of Stewart and dropped his counterclaim. Two years later, Weddell brought an action against the three attorneys, alleging a breach of fiduciary duty, bias, etc. The attorneys sought dismissal on the grounds of non-mutual claim preclusion.
As I said, it reads like a wonderful final exam question for a hybrid CivPro/ADR class. The opinion should, one might imagine, be an outstanding teaching tool…
The majority opinion spends its time explaining the policy justifications its expansion of Nevada state law’s test for the application of claim preclusion – an issue I do not believe was even briefed in the case. They decide (curiously in my view) that Weddell could have joined the three attorneys in the context of his counterclaim against Stewart (related to the enforcement of the award) and that because he did not do so then, he is now barred from doing so. Were they my students writing a final exam answer, I’d have all kinds of questions for them about why nonmutual issue preclusion wouldn’t have sufficed, why we wouldn’t presume that Weddell’s strategic consideration might not be different from one litigation posture to another, why we wouldn’t consider the fact of a conceded dismissal differently than an adjudicated one, etc etc. But there it is. Nevada has expanded the availability of issue preclusion by diluting traditional privity requirements.
The dissent, although not lengthy, managed to confuse mediation with arbitration no fewer than eight times in a single opinion. (Jean Sternlight, this is your state. Is it fair for me to subconsciously blame you? If no, I owe you a subconscious apology.) In the most maddening of sentences, the dissent writes, “The suit by Weddell against the mediators seems doomed as a matter of common law arbitral immunity.” ?! I don’t even know where to start, but I’ll start with this: I really thought that Nevada has statutory arbitrator immunity, granting arbitrators full judicial immunity. And I’ll spare the lengthy treatment of the question of arbitrator immunity as opposed to mediator immunity (the latter of which doesn’t even fully answer the issue, if in fact, for some reason, the parties’ contract with the three attorneys somehow precludes the three attorneys from enjoying arbitral immunity as commonly understood). Etc.
As I said,
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