I missed this decision from late last year.  Although, since it’s not a coverage case -- which is what I follow -- I had no real chance of learning about it when it came down. 
But even though it’s not a coverage case in the traditional sense, it has as much to do with insurance coverage as even the most important cases discussed in Coverage Opinions.  So I was delighted when CO reader Dan Borinsky, of Esquire Settlement in Alexandria, Virginia, brought this gem to my attention.  I am grateful to Dan for alerting me to this important case that I can report on here.

It is a generally accepted rule of evidence that a plaintiff cannot tell the jury that the defendant has liability insurance.   That’s that.  But the Supreme Court of Nevada, in Capriati Construction Corp. v. Yahyavi, No. 80107 (Nev. Nov. 10, 2021), held just the opposite: the trial court did not get it wrong when it charged the jury that a tort defendant had liability insurance to satisfy a verdict.

The case arose out of a simple motor vehicle accident.  An employee of Capriati Construction drove a forklift into a street travel lane and collided with a vehicle driven by Bahram Yahyavi.  Yahyavi brought an action against Capriati Construction, which denied liability.  Capriati filed for bankruptcy.  Following conclusion of the bankruptcy, the tort action went to trial. During the plaintiff’s case, the forklift operator admitted fault.

During Capriati’s case, testimony was elicited that its business had filed for reorganization.  Yahyavi objected on the grounds that his recovery would be prejudiced by this intentional introduction of inadmissible evidence suggesting to the jury that Capriati would be unable to pay a judgment.  The court agreed and, among other things, instructed the jury that Capriati had liability insurance to satisfy any verdict.

One of the issues on appeal to the Nevada Supreme Court was whether the trial court erred when it instructed the jury that it could consider Capriati’s liability insurance.
The high court upheld the jury charge.  The analysis, not lengthy, it centered around NRS 48.135(2) which provides as follows:
1. Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully.

2. This section does not require the exclusion of evidence of insurance against liability when it is relevant for another purpose, such as proof of agency, ownership or control, or bias or prejudice of a witness.

The crux of the court’s decision is that, under paragraph 2, the introduction of Capriati’s liability insurance was relevant for another purposes, other than whether a person acted negligently or otherwise wrongfully.

Citing decisions from the high courts of Arkansas and West Virginia, the Capriati Construction explained its decision as follows:

Persuasive authorities lead us to conclude that evidence of a defendant’s liability insurance is admissible under NRS 48.135(2) if the defendant first introduces evidence suggesting its inability to pay a judgment. (citations omitted)

Capriati first introduced evidence of its bankruptcy, thereby suggesting that it was unable to pay a judgment in favor of Yahyavi. Thus, to cure the resulting prejudice, the district court appropriately instructed the jury that Capriati had liability insurance to satisfy any judgment. This instruction accurately states Nevada law, and the district court therefore acted within its discretion.

As I said, while the decision is not a coverage case in the traditional sense, it has as much to do with insurance coverage as even the most important cases discussed in CO.