Nevada Supreme Court Restricts Exercise of Jurisdiction Over Non-Resident Owners of Vehicles Involved in Nevada Accidents

Unlike their brethren on the U.S. Supreme Court, the Nevada Supreme Court rarely produces close split decisions.  Very recently, however, they did just that – issuing a four to three split decision in the case of Dogra v. Liles, 129 Nev. Adv. Op. 100.  The split is all the more notable as one of the justices (Douglas) had recused himself and was replaced by District Court Judge Patrick Flanagan, who was appointed by Governor Sandoval to hear the case pursuant to Article 6, Section 4 of the Nevada Constitution.  It was Judge Flanagan who authored the majority opinion.

The case that prompted this rare display of discord came about as a result of an auto accident on I-15 in southern Nevada.  Susan Liles, a young adult resident of California, was heading to Las Vegas to attend the birthday party of a friend.  Susan was driving a Scion that her mother Jane had purchased for her use while she attended college.  Jane was the registered owner of the car and placed the car under her personal insurance policy with Susan listed as the primary driver.  Both Jane and Susan admitted in deposition testimony that Jane placed no restrictions on Susan’s use of the car, including where she could drive it.

While driving northbound on I-15, Susan lost control of the vehicle causing it to swerve into an adjoining lane.  This caused a chain reaction where the car in that lane swerved to avoid a collision with Susan, crashed into the center median, flipped over, and landed on top of a vehicle traveling southbound on I-15 that was owned and driven by Melinda and Jagdish Dogra.  In all, four sets of plaintiffs filed claims for injuries resulting from the accident.

Jane and Susan’s insurance coverage limits were inadequate to compensate the victims for the extent of their injuries.  The insurance company, therefore, filed an action interpleading the policy limits and leaving it to the District Court to sort out the competing claims to the insurance money.  Not satisfied with the compensation from the interplead funds, the Dogras, and other plaintiffs, filed individual complaints against Susan and Jane alleging negligence and negligent entrustment.

Jane moved to dismiss the complaint against her based on a lack of personal jurisdiction.  The District Court agreed and dismissed the complaint.  The Dogras appealed the dismissal to the Nevada Supreme Court.  The key issue in the appeal is whether Jane, a California resident, could be brought within the jurisdiction of the Nevada courts through the act of allowing Susan unrestricted use of her vehicle.  In his majority opinion, Judge Flanagan held that she could not and, therefore, the District Court did not err in dismissing the complaint against Jane.

The holding in this case has tremendous consequences for Nevada residents injured in accidents involving vehicles owned by residents of other states.  Given Nevada’s tourist economy, small size, and proximity to California, we have an unusually high proportion of out of state vehicles traveling on our roadways.  Where these vehicles are involved in accidents, and driven by someone other than the registered owner, this decision constrains Nevada citizen’s ability to seek justice within their own court system.

To understand the reasoning behind the majority opinion, one must first understand the intricacies of the doctrine of specific personal jurisdiction.  Nevada may exercise jurisdiction over non-residents only if it does not offend guarantees of due process contained within the United States Constitution.  As laid out in the seminal case of Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945), due process requires a non-resident defendant to have sufficient “minimum contacts” with the state in which the complaint is filed “such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.”  Id. at 316.  The central question in the Dogra was whether Jane’s allowance of unrestricted use of the vehicle by Susan provided the requisite minimum contacts required to allow a Nevada court to exercise jurisdiction over Jane in a case arising from Susan’s use of the vehicle.

The majority reasoned that because Jane did not specifically authorize Susan to drive the Scion to Nevada, and did not provide the car to Susan knowing that she would regularly use it in Nevada, she did not establish the minimum contacts required to be brought within the jurisdiction of Nevada courts.  In doing so they primarily relied on two decisions from other jurisdictions, Tavoularis v. Womer, 462 A.2d 110 (N.H. 1983) and Stevenson v. Brosdal, 813 So. 2d 1046 (Fla. Dist. Ct. App. 2002).

In Tavoularis, the New Hampshire court held that a lower courts exercise of specific personal jurisdiction over a non-resident defendant was proper because the owner of the car specifically authorized his friend to drive the car in New Hampshire.  462 A.2d at 114.  In Stevenson, the Florida court also upheld jurisdiction over a non-resident defendant where the defendant loaned his car to his son knowing that the son would regularly use the car in Florida.  813 So. 2d at 1049.  Judge Flanagan, and the majority, read these decisions narrowly holding that non-resident defendant must either (1) give specific authorization to another driver to use their vehicle in Nevada, or (2) specifically know that the driver intends to use the vehicle in Nevada and does not place any restrictions on such use.  Dogra, 129 Nev. Adv. Op. at 7.

The three justice dissent, authored by Justice Gibbons, reasoned that while Jane did not give explicit permission for Susan to drive the car in Nevada, she implicitly authorized the activity when she gave Susan unrestricted use of the vehicle.  Reading Tavoularis and Stevenson more liberally, Justice Gibbons concluded that given the proximity of Las Vegas to California, it was reasonably foreseeable that Susan would use the car in Nevada exposing Jane to the possibility of a lawsuit in that forum.  Dogra, Gibbons Dissent at 4-5.  Thus, Jane’s providing unrestricted permission to Susan to use the vehicle established the minimum contacts necessary for Nevada courts to exercise jurisdiction over her. 

The majority opinion in Dogra places additional burdens upon plaintiff’s counsel in cases involving negligent entrustment claims against non-resident owners of vehicles who loan their cars to drivers involved in accidents in Nevada.  In order to survive a motion to dismiss against the vehicle owner, plaintiffs must provide evidence demonstrating conformance with either of the two conditions outlined by Judge Flanagan.  Absent such evidence, the doors of Nevada’s courts will be closed to plaintiffs in similar cases.