Countrywide Home Loans, Inc. v. ThitchenerCountrywide Home Loans, Inc. v. Thitchener
By the Court,
This appeal and cross-appeal from a district court order in a breach of contract and tort action arising from improper foreclosure proceedings involve several compensatory and punitive damage award issues. With respect to compensatory damages, since respondents/cross-appellants’ actual losses did not exceed the damages that they incurred to their real and personal property, we conclude that they were not entitled to recover separately under breach of contract and negligence theories in addition to theories of trespass and conversion. Moreover, we conclude that the district court inappropriately trebled the jury’s award for trespass and conversion as it relates to personal property. In the remaining portions of the compensatory damages awarded, we perceive no error.
Regarding the punitive damage award, we conclude that the award wаs supported by substantial evidence, and we affirm the district court’s judgment in that respect. In doing so, we take this opportunity to clarify our punitive damages jurisprudence in light of
FACTS AND PROCEDURAL HISTORY
This case arose when appellant/cross-respondent Countrywide Home Loans, Inc. (Countrywide), misidentified and foreclosed upon a condominium unit owned by respondents/cross-appellants Gerald and Katrina Thitchener (the Thitcheners) while they temporarily were residing in another state.
The Thitcheners financed the purchase of their Las Vegas condominium through Countrywide in 1998. In January 2002, Gerald was deployed by the Air National Guard to Tucson, Arizona. In July 2002, Katrina and the Thitcheners’ children joined Gerald in Tucson and the family moved into a rental property.
Because the move was temporary, Katrina left the family’s possessions in their Las Vegas condominium and kept the power on in the unit. In the meantime, the Thitcheners continued to pay their condominium’s utility bills, homeowners’ association dues, and property taxes, and they had their Countrywide mortgage bills forwarded to their Tucson address.
While in Tucson, the Thitchenеrs missed their mortgage payments for March, April,
Days after the Thitcheners cured their default, Countrywide initiated separate foreclosure proceedings against James Rangel, a condominium owner in the Thitcheners’ complex. Countrywide dispatched its contractor to inspect Rangel’s condominium but did not list Rangel’s unit number, unit 10, on the computer-generated inspection form. Without a listed unit number, the contractor assumed that Countrywide had requested another inspection of unit 118 — the Thitcheners’ unit — and entered that unit number on the inspection form.
Using the Thitcheners’ unit number designated on the inspection form, Countrywide updated its computer records pertaining to Rangel’s loan. Relying on these computer records from this point forward, Countrywide confused the Thitcheners’ unit for Rangel’s and mistakenly preрared it for resale.
To prepare the Thitcheners’ unit, Countrywide asset manager Jennifer Baldwin hired James Standley, a local real estate agent. Standley entered the unit with a locksmith. Inside, he discovered stacks of unopened mail, stray articles of clothing on the floor, food in the refrigerator, and an absence of toiletries and beds. Though the unit’s power was on and it still contained the Thitcheners’ personal effects, Standley determined that the unit was abandoned.
Following his inspection, however, Standley contacted Baldwin to verify that he was marketing the correct unit. Baldwin confirmed that he was and, proceeding on this knowledge, Standley transferred the utilities into his name and hired David Leyba to “trash-out” the premises. According to Standley’s instructions, Leyba apparently stored only those items with replacement value and disposed of them after 30 days. Anything else he discarded.
After removing the Thitcheners’ belongings, Standley learned that the unit’s homeowners’ association dues were current. Concerned, Standlеy contacted Baldwin a second time. For verification, Baldwin contacted her manager, Dennis Gierula, who referred her to Countrywide’s foreclosure department, which then notified Baldwin that she could proceed. Again, Baldwin confirmed with Standley that he was marketing the correct unit.
Around this time in April 2003, the Thitcheners realized that their utilities were now in Standley’s name, and Countrywide discovered that its records reflected two owners on the title for unit 118: Rangel and the Thitcheners. After meeting with Countrywide’s legal department, Baldwin canceled escrow, asked Standley to inventory the Thitcheners’ possessions from memory, and instructed him to direct any inquiries to Dennis Gierula.
In the meantime, pursuing this matter from Tucson, the Thitcheners contacted neighbors and family, who informed them that their possessions had been removed and a property management company’s sign now hung in their window. The Thitcheners then contacted Standley, who informed them that they were in foreclosure and that Countrywide was preparing to sell their home. After contacting Baldwin, the Thitcheners were referred to Countrywide’s legal department, which did not return their phone calls. Returning to Las Vegas in August 2003, the Thitcheners discovered that their home was empty.
Seeking to recover general and special damages for their real and personal property as well as punitive damages, the Thitcheners sued Countrywide, asserting claims for trespass, conversion, negligence, negligence per se, negligent infliction of emotional distress (NIED), breach of contract, and breach of the covenant of good faith and fair dealing. The district court granted judgment as a matter of law against the Thitcheners on their NIED and negligence per se claims. Countrywide conceded liability with respect to the Thitcheners’ remaining claims but contested the Thitcheners’ damages.
After a trial on damages, the jury awarded the Thitcheners a total of $922,690 in general and special damages, which included $322,690 for trespass and conversion, and awarded $2,500,000 in punitive damages. Following
Countrywide moved for remittitur. The district court partially granted the motion and capped the amount of punitive damages at three times the untrebled amount of the Thitcheners’ trespass and conversion damages, reducing the punitive damage award to $968,070. The district court denied all of Countrywide’s separate challenges and entered final judgment for the Thitcheners totaling $3,077,057.50.
Countrywide appeals, arguing that several errors rendered the compensatory and punitive damage awards excessive. The Thitcheners cross-appeal, asserting that the punitive damage award should not have been remitted and their NIED and negligence per se claims should have been presentеd to the jury.
DISCUSSION
Compensatory damages
The jury awarded the Thitcheners $1,000 for trespass and conversion to real property; $321,690 for trespass and conversion to personal property; $300,000 for Countrywide’s negligence; and $300,000 for breach of contract, which included damages for the breach of the covenant of good faith and fair dealing. Following the jury’s verdict, the district court trebled the Thitcheners’ trespass and conversion damages, bringing the total compensatory damage award from $922,690 to $1,568,070. Countrywide challenges this award, arguing that (1) portions of it are duplicative, (2) the damages awarded for conversion were improperly trebled, and (3) the amount of special damages awarded for the Thitcheners’ lost belongings is excessive. We address each of Countrywide’s arguments in turn.
Duplicative awards
Countrywide contends that each of the $300,000 awards for breach of contract and negligence duplicated the amount awarded for trespass and conversion and thus the total compensatory damage award exceeded the Thitcheners’ total losses. We agree.
While plaintiffs are permitted to plead alternative or different theories of relief based on the same facts, plaintiffs may not recover more than their “total loss plus any punitive damages assessed.’ ’
With respect to their breach of contract claim, the Thitcheners were required to present “an evidentiary basis for determining a reasonably accurate amount of damages.”
Because no physical harm occurred in this case and the Thitcheners’ NIED claim failed as a matter of law, personal injury damages and emotional impact damages were not before the jury. On the Thitcheners’ trespass and conversion claims, the jury awarded $1,000 for damages to real property and $321,690 for damages to personal property. Since these damages exhausted the potential recovery in this case, we conclude that the Thitcheners were not entitled to recover damages separately under their breach of contract and negligence claims.
Trebled damages to personal property
Countrywide contends that the district court improperly applied
If a person recover[s] damages for a forcible or unlawful entry in or upon, or detention of, any building or any uncultivated or cultivated real property, judgment may be entered for three times the amount at which the actual damages are assessed.
Although we generally look no further than its plain language when determining a statute’s meaning, when a statute may be interpreted in more than one reasonable manner, the statute is ambiguous, and we will resort to rules of statutory interpretation to effect a construction that reflects the Legislature’s intent.
Because
In view of these competing interpretations, both of which are reasonable,
Special damages award
Countrywide argues that the jury’s award of special damages was excessive, based on the district court’s failure to give its proposed jury instruction on special value. Because of this, Countrywide asserts that the amount of special damages awarded for the Thitcheners’ irreplaceable but nonmarketable property was not supported by the record. We disagree. The district court has broad discretion to settle jury instructions, and its decision to give or decline a particular instruction will not be overturned absent an abuse of discretion or judicial error.
According to the Restatement (Second) of Torts § 911, when converted property’s value to the owner exceeds its market value, the owner may be compensated for its special value, which is measured by “factors apart from those entering into exchange value that cause the article to be more desirablе to the owner than to others.”
Here, the district court gave the following jury instruction on special value: ‘ ‘Where there is the destruction of personal property without a market value, it does not mean the property is valueless and that damages cannot be recovered by the plaintiff, rather, plaintiff is entitled to damages bаsed upon the property’s special value to the plaintiff.” By contrast, Countrywide’s jury instruction would have prohibited the jury from considering the property’s sentimental value, and would have directed it to consider only “the value of the lost or damaged personal property to the [Thitcheners].”
While Countrywide’s proposed instruction on special value was correct as far as it went, it was incomplete because it failed to explicitly differentiate between special value and ordinary market value. As such, it approximated
Alternatively, Countrywide argues that there was insufficient evidence that the Thitcheners’ irreplaceable possessions had enough special value to support the $321,690 award of special damages. We disagree. Since special damages are a species of compensatory damages, a jury has wide latitude in awarding them.
At trial, the Thitcheners testified that they would not sell certain irreplaceable possessions that were lost in the “trash-out” regardless of the amount offered. While this testimony alone is legally insufficient as a measure of special value,
As Countrywide points out, some rational measures of special value are ‘“the difficulty and expense to which [a] plaintiff was put in acquiring the property’ and ‘the nature and character of [its] use.’ ’ ’
Punitive damages
After the jury returned a verdict awarding the Thitcheners $2,500,000 in punitive damages, Countrywide moved to remit the award, arguing that it was excessive due to several errors. The district court granted the motion in part, remitting the punitive damage award to $968,070 in accordance with
Standard of review
An award of punitive damages will not be overturned if it is supported by substantial evidence of implied malice or oppression.
Under
Conscious disregard of the Thitcheners’ rights
Punitive damages are designed to punish and deter a defendant’s culpable conduct and act as a means for the community to express outrage and distaste for such conduct.
In this case, the district court determined that punitive damages were available and submitted the issue to the jury based on evidence that Countrywide ignored numerous warning signs that likely would have led it to discover its error in misidentifying the Thitcheners’ condominium unit before it disposed of the Thitcheners’ personal belongings and listed their unit for sale. Finding that there was clear and convincing evidence that Countrywide consciously disregarded the Thitcheners’ rights, the jury awarded punitive damages on alternative theories of implied malice and oppression.
Here, Countrywide argues that the Thitcheners failed to prove that it consciously disregarded their rights because there was no direct evidence that it actually knew that it was proceeding against the wrong condominium unit. In response, the Thitcheners argue that Countrywide knew that it might have misidentified the Thitcheners’ unit while handling Rangel’s foreclosure due to numerous “red flags,” but willfully and deliberately failed to act to avoid the consequences of its mistake by neglecting to adequately investigate these warning signs.
We have never formally addressed what conduct amounts to conscious disregard under
In both of these cases, a divided court vigorously disputed the meaning of “malice, express or implied” under former
In his concurring opinion in Craigo, however, Justice Springer viewed former
Notably, however, the application of Justice Springer’s approach to implied malice produced results that were seemingly at odds with his definition of conscious disregard.
In light of the discord noted above and given
As part of this conclusion, we expressly retreat from our past use of the term “unconscionable irresponsibility” to describe the outer limit of culpаble conduct that is immune from civil punishment in Nevada. In First Interstate Bank v. Jafbros Auto Body, we stated that “even unconscionable irresponsibility will not support a punitive damages award.”
Punitive damages were not improper
We next consider Countrywide’s argument that punitive damages were improperly submitted to the jury because there was insufficient evidence for the jury to infer that it acted with conscious disregard for the Thitcheners’ rights. In light of the new alignment in our punitive damage jurisprudence discussed above, we cannot agree.
In this case, the Thitcheners presented evidence of multiple ignored warning signs suggesting that Countrywide knew of a potential mix-up, as well as evidence indicating that Countrywide cоntinued to proceed with the foreclosure despite knowing of the probable harmful consequences of doing so. The Thitcheners appeared as owners of the condominium unit in several documents in Rangel’s foreclosure file, including an appraisal report, a broker price opinion, and a preliminary title report. By her own admission, Baldwin reviewed the appraisal report, understood that the Thitcheners owned this property, but did not consider this to be problematic in preparing the property for resale. Baldwin was similarly indifferent regarding the broker price opinion, which she also admittedly ignored. Although the preliminary title report was available for this property, Baldwin did not review it, leaving that task to a subordinate. What is more, Countrywide’s realtor twice directly notified Baldwin that there was a potential mix-up. After the second time, Baldwin e-mailed an unidentified person in Countrywide’s foreclosure department, who notified her that she could proceed. Countrywide, however, could not produce Baldwin’s e-mail, nor could it produce the unidentified person from its foreclosure department who gave her this
Moreover, as a foreclosure specialist, Baldwin presumably understood that proceeding in the face of these warning signs involved an imminent, as opposed to merely a theoretical, risk of harm to this particular unit’s lawful owner. Given this knowledge of the probable harm that would result from a wrongful foreclosure, the jury reasonably could have inferred that Countrywide’s casual attempts at verification indicated a willful and deliberate failure on its part to avoid that harm. Consequently, the jury could have logically concluded that Countrywide consciously disregarded the Thitcheners’ rights.
Separately, Countrywide argues that the amount of punitive damages awarded in this case is excessive. We disagree. Applying the statutory cap under
Vicarious corporate liability for punitive damages
Countrywide contends that instructing the jury under Smith’s Food & Drug Centers v. Bellegarde
At trial, the Thitcheners argued that Countrywide was subject to punitive damages on the theory that it was vicariously liable for Baldwin’s conduct. The Thitcheners then requested and received an instruction based on the complicity rule of the Restatement (Second) of Torts § 909 that we adopted in Bellegarde with regard to an employer’s vicarious liability for punitive damages for the acts or omissions of its agents.
Enacted in 1995,
(a) The employer had advance knowledge that the employee was unfit for the purposes of the employment and employed him with a conscious disregard of the rights or safety of others;
(b) The employer expressly authorized or ratified the wrongful act of the employee for which the damages are awarded; or
(с) The employer is personally guilty of oppression, fraud or malice, express or implied.
In this way,
Although
Nevertheless, we conclude that this instructional error does not require reversal, since the jury reasonably could have determined under
In this case, Baldwin was a Countrywide “asset manager.” Although her title is not dispositive,
Having concluded that Baldwin was a managing agent for purposes of
The Thitcheners’ cross-appeal
On cross-appeal, the Thitcheners raise two arguments. First, they argue that the district court improperly entered judgment as a matter of law under NRCP 50(a) on their NIED and negligence per se claims. Viewing the evidence and all inferences in the Thitcheners’ favor, we disagree. Indeed, we eliminated NIED claims based on damage to property in Smith v. Clough,
CONCLUSION
Based on the above, we affirm the district court’s judgment as to the punitive damage award of $968,070. However, because the Thitcheners were not entitled to recover compensatory damages beyond those awarded on their claims for trespass and conversion, we reverse the judgment as it pertains to the damages awarded on their claims for breach of contract and negligence. Furthermore, while we affirm the $3,000 award in the judgment for trespass to real property, we conclude that the personal property damages on the Thitcheners’ conversion claim were improperly trebled and reverse the judgment as to those damages. Based on the above, we remand this matter to the district court with instructions to amend its judgment to reduce the Thitcheners’ personal property damages as set forth in this opinion and to allow for a non-duplicative award on all theories of recovery. The district court’s awards of pre- and post-judgment interest should be adjusted accordingly.
Notes
Respondents/cross-appellants Steven Lamb and Kaitlyn Thitchener, the Thitcheners’ children, were minors at the time when the underlying suit was initiated.
Since the Thitcheners’ NIED and negligence per se claims were formally resolved by a written stipulation and order of dismissal entered after the district court amended its judgment upon the jury verdicts, that order сonstitutes the final appealable judgment in this case. See NRAP 3A(b)(l); Lee v. GNLV Corp.,
Topaz Mutual Co. v. Marsh,
Mort Wallin v. Commercial Cabinet,
See Dalton Properties, Inc. v. Jones,
See Prabhu v. Levine,
See Colorado Environments v. Valley Grading,
Westpark Owners’ Ass'n v. Dist. Ct.,
d. at 357,
See Coast Hotels v. State, Labor Comm’n,
Cf. Hale v. Warren,
Countrywide also argues that
Skender v. Brunsonbuilt Constr. & Dev. Co.,
Restatement (Second) of Torts § 911 cmt. e (1979).
Id.; see Landers v. Municipality of Anchorage,
See Mort Wallin v. Commercial Cabinet,
See Restatement (Second) of Torts § 911 cmt. e (1979) (noting that where irreplaceable but nonmarketable articles have special value “it would be unjust to limit the damages for destroying or harming the articles to the exchange value”).
See Quintero v. McDonald,
Mort Wallin,
See Campins v. Capels,
Robinson v. U.S.,
See Quintero,
Countrywide also argues that the jury’s $321,690 award was excessive based on certain references by the Thitcheners’ attorney to emotional damages and suggestions of Countrywide’s wealth, arrogance, and remorselessness. At trial, Countrywide objected to the emotional damages reference, which was overruled, but let the remaining comments pass without objection. Following trial, the district court denied Countrywide’s motion for a new trial based on the “permeation” rule in Barrett v. Baird,
Bongiovi v. Sullivan,
Id. (quoting First Interstate Bank v. Jafbros Auto Body,
Id. (quoting Jafbros Auto Body,
Bongiovi,
Evans v. Dean Witter Reynolds, Inc.,
See Nevada Credit Rating Bur. v. Williams,
See, e.g., Craigo,
Craigo,
Coughlin v. Tailhook Ass’n,
Craigo,
Id. at 12 n.l, 14-17,
Craigo,
Id. at 11-12,
Id. at 20-21,
Since Justice Springer derived his notion of conscious disregard from Leslie and Lemler, and, to a lesser degree, Village Development Co. v. Filice,
In reaching this conclusion, we cannot proceed without addressing our decision in Maduike v. Agency Rent-A-Car,
106 Nev. 54, 57,
See Filice,
Because of Countrywide’s failure to produce perhaps the best evidence to exonerate it of punitive damage liability in this case, the district court permitted the jury to infer that the lost e-mail and the unidentified person’s testimony would have been unfavorable to Countrywide had this evidence been produced. See Bass-Davis v. Davis,
Countrywide characterizes this case as a convergence of undetected mistakes and therefore contends that there was insufficient evidence that it acted with “an actual knowledge, equivalent to the intent to cause harm.” The intent to cause harm, however, is the mental element of express malice and plays no role in analyzing a defendant’s conscious disregard for purposes of implied malice or oppression. Moreover, to the extent that Countrywide asserts that
While the Thitcheners’ negligence claim addresses Countrywide’s initial data entry error and repeated failures to discover it, since punitive damages on a theory of implied malice or oppression is a remedy that punishes a culpable cognitive state, the Thitcheners’ request for punitive damages targets Countrywide’s apparent willful and deliberate failure to act appropriately to avoid the probable harmful consequences of foreclosing on the wrong property.
Notably, at least one other jurisdiction requiring a mental state approximating conscious disregard has recently upheld a punitive damage award under roughly similar circumstances. In Mahana v. Onyx Acceptance Corp., the plaintiff sued a prior lienholder for conversion and sought punitive damages for the wrongful repossession of his truck.
Id. at 610-11,
In the instant underlying action, the district court instructed the jury as follows:
Punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if, (a) the principal or a managerial agent authorized the doing and the manner of the act, or (b) the agent was unfit and the principal or a managerial agent was reckless in employing or retaining him, or (c) the agent was employed in a managerial capacity and was acting in the scope of employment, or (d) the principal or a managerial agent of the principal ratified or approved the act.
See, e.g., Senate Daily Journal, 68th Leg. 18 (Nev., June 2, 1995) (comments of Senator Mark A. James); Hearing on S.B. 474 Before Senate Comm, on Judiciary, 68th Leg. (Nev., May 18, 1995) (noting the testimony of the Nevada Resort Association’s representative, indicating that the thrust of the bill is to “eliminate vicarious liability for punitive damages” by requiring “deliberate, i.e,, knowing conduct [on behalf of employers]”).
Id.
In doing so, however, we strictly construe
NRCP 61 (errors not affecting the parties’ substantial rights are harmless and must be disregarded); Insurance Co. of the West v. Gibson Tile, 122 Nev 455, 463,
Bellegarde,
See Nittinger v. Holman,
See id.
See Nelson v. Heer,
We have carefully reviewed the parties’ separate arguments regarding pre- and post-judgment interest and determine that each argument lacks merit. Accordingly, pre- and post-judgment interest on remand should be recalculated in light of the reductions to the Thitcheners’ overall compensatory damage award at the same 8.25-percent rate as specified in the district court’s original judgment.