The Nevada Supreme Court issued an opinion on January 29, 2026, answering a certified question from the U.S. Court of Appeals for the Ninth Circuit in *North River Insurance Company v. James River Insurance Company*. The case addresses whether an excess insurer can claim equitable subrogation against a primary insurer under Nevada law.
The dispute arose from a liability insurance arrangement where North River Insurance Company, a New Jersey corporation, served as the excess insurer, while James River Insurance Company, an Ohio corporation, acted as the primary insurer for their mutual insured. Both companies issued liability insurance policies covering the same policyholder.
According to the court record, James River agreed to defend a lawsuit filed against the insured party. During the litigation process, James River declined three settlement offers that were at or below its policy limit. The lawsuit eventually settled before reaching trial, but the final settlement amount exceeded James River's policy limit.
Because the settlement exceeded the primary insurer's policy limit, both insurance companies were required to contribute funds to cover the settlement. This situation led North River to seek equitable subrogation against James River, claiming the primary insurer's handling of the case resulted in unnecessary exposure for the excess insurer.
Equitable subrogation is a legal doctrine that allows one party who pays a debt to step into the shoes of the creditor and seek recovery from another party who should have been responsible for the payment. In the insurance context, this typically occurs when one insurer pays claims that should have been covered by another insurer's policy.
The Ninth Circuit Court of Appeals certified the question to the Nevada Supreme Court because it involved an unsettled issue of Nevada state law that was central to resolving the federal case. Certified questions allow federal courts to obtain definitive rulings on state law issues from the highest court of that state, ensuring consistent application of state law principles.
The Nevada Supreme Court heard the case en banc, meaning all justices participated in the decision rather than a smaller panel. Chief Justice Herndon authored the court's opinion, which provides guidance on how Nevada law treats subrogation claims between insurers in multi-layer insurance arrangements.
The legal representation in the case included prominent law firms from multiple jurisdictions. North River Insurance Company was represented by O'Melveny & Myers LLP, with attorneys Anton Metlitsky from New York, and Sabrina H. Strong, Zoheb P. Noorani, and Jessica A. Snyder from Los Angeles. Local Nevada counsel included Campbell & Williams and J. Colby Williams from Las Vegas.
James River Insurance Company retained Holland & Hart LLP with attorneys Abraham G. Smith and Lauren D. Wigginton from Las Vegas, along with Sheppard, Mullin, Richter & Hampton LLP with Jeffrey V. Commisso and Benjamin D. Brooks from San Diego, California.
The case highlights the complex relationships between primary and excess insurers when defending claims that may exceed policy limits. Primary insurers have a duty to defend and settle claims within their policy limits, while excess insurers become liable only when settlements or judgments exceed the primary coverage.
When primary insurers decline reasonable settlement offers within their policy limits, they may expose excess insurers to liability. This situation creates tension between the different layers of insurance coverage and raises questions about each insurer's obligations to the others.
The Nevada Supreme Court's answer to the certified question will provide clarity for insurance companies operating in Nevada and may influence how similar disputes are resolved in other jurisdictions. The ruling will likely address the specific circumstances under which an excess insurer can successfully pursue subrogation claims against a primary insurer.
This case demonstrates the importance of coordination between primary and excess insurers in handling claims and settlement negotiations. The decision may impact how insurance companies structure their policies and manage their relationships with other insurers in multi-layer coverage arrangements.
The resolution of this certified question will allow the Ninth Circuit to complete its consideration of the underlying federal case. The federal appeals court had been unable to resolve the dispute without first obtaining clarification on Nevada state law principles governing insurance subrogation.
Insurance law practitioners and companies with multi-layer insurance coverage will closely watch how this decision affects future subrogation claims and the duties insurers owe to each other in complex coverage scenarios. The ruling may also influence settlement strategies and risk management practices in the insurance industry.