Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Nev. Sup. Ct.: New punitive damages trial ordered in consumer action over failed home purchase, (Oct 20, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a consumer against a residential home builder and its financing division for alleged fraudulent and deceptive trade practices in his failed home purchase and loan arrangement, an en banc Nevada Supreme Court has reversed and remanded the case for a new trial on the issue of punitive damages (D.R. Horton, Inc. v. Betsinger, October 16, 2014, Cherry, M.).

Steven Betsinger entered into a contract with builder D.R. Horton to purchase a home in Las Vegas and applied for a loan with DHI Mortgage, D.R. Horton’s financing division. After DHI Mortgage refused to fund the loan at the interest rate originally offered, Betsinger cancelled the contract. Betsinger filed suit against D.R. Horton and DHI Mortgage when D.R. Horton failed to return his earnest money, asserting claims for fraud and deceptive trade practices. A jury, finding in favor of Betsinger, awarded him compensatory damages against both defendants as well as punitive damages against DHI Mortgage.

The parties appealed. The court, in reversing the judgment as to consequential damages due to failure to present evidence of emotional distress, remanded the punitive damages award for determination in light of the reduction in consequential damages. Following the trial court’s instructions to determine what amount of punitive damages, if any, Betsinger was entitled to, the jury returned a verdict in favor of Betsinger in the amount of $675,000. The parties appealed.

The court found that the trial court’s jury instruction regarding punitive damages violated the “same trier of fact” requirement of Nevada Revised Statutes 42.005(3). NRS 42.005 governs when punitive damages are authorized and how those damages are to be awarded. NRS 42.005(3) requires the same finder of fact to determine whether liability exists for punitive damages and, if so, the amount of the damages.

According to the court, the plain language of NRS 42.005(3) indicates that a single judge or jury must determine both whether punitive damages should be assessed and, in a subsequent proceeding, the amount of such damages. In the case’s second trial, the fact finder was tasked only with making a determination regarding punitive damages where NRS 42.005(3) unambiguously requires the fact finder to first determine whether punitive damages were warranted. Thus, the trial court erred by permitting the second jury to consider only the amount of damages to be awarded and the matter must be reversed and remanded for a new trial on punitive damages, the court concluded.

The case is No. 59319.

Attorneys: Pat Lundvall, Debbie A. Leonard, and Kerry St. Clair Doyle for D.R. Horton, Inc. and DHI Mortgage Company, Ltd. David J. Feldman and John C. Dorame (Feldman Graf, P.C.) for Steven M. Betsinger

Companies: D.R. Horton, Inc.; DHI Mortgage Company, Ltd.

Cases: StateUnfairTradePractices NevadaNews