Valley Hospital v. Garner

NC-DSH, Inc. d/b/a/ Valley Hospital v. Garner

125 Nevada Advanced Opinion Number 50

On October 29, 2009, the Nevada Supreme Court unanimously made a ruling in the above-referenced action involving clients whose claim was stolen by their own attorney.  The attorney forged their signatures to settlement agreements (along with forged notary acknowledgements) on a medical malpractice case, got the opposing side/hospital to pay and sign a stipulation for dismissal, and submitted the order of dismissal to the court for execution.  The lawyer then disappeared with the funds. 

In a footnote, the Court explained that the Plaintiffs cooperated with the State Bar of Nevada in prosecuting the attorney criminally and with disbarment proceedings.  However they waited 18 months before moving to have the dismissal set aside as “fraud on the court.”  They labeled both the Plaintiffs and the Defendants as victims of the fraud.  

The Supreme Court found that the attorney did not have the actual authority to settle on behalf of his client by forging the signatures, and affirmed setting aside the dismissal.  They also affirmed the District Court allowing the Defendant/Hospital an offset for the settlement amount against any eventual recovery the family got from the medical malpractice action.  The Court also overruled the argument that the Plaintiffs ratified the settlement by agreeing to accept the same (but additional) amount to settle their claims, which would double the costs for the Defendants, finding that the District Court’s finding on this issue was not clearly erroneous. 

The Court explained that NRCP 60(b), which allows judgments to be set aside for fraud, only applies when there is fraud by the other side.  NRCP 60(b) requires the motion to set aside (or separate action) be brought within 6 months of entry of judgment.  The Court explained that because there was fraud on the court by their own attorney, the Plaintiffs could obtain relief to set aside the final judgment.  They found there was no showing of prejudicial delay.

The decision was authored by Justice Pickering, and contains a comprehensive discussion of fraud on the court.

Steven R. Bartell, Esq.