Countrywide Home Loans, Inc. v. Thitchener

• Citation: 192 P.3d 243
• Decision Date: 11 September 2008
• Docket Number: No. 46499.,46499.
• Parties: COUNTRYWIDE HOME LOANS, INC., A New York Corporation, Appellant/Cross-Respondent, v. Gerald THITCHENER; Katrina Thitchener; Steven Lamb; and Kaitlyn Thitchener, Respondents/Cross-Appellants.
• Court: Nevada Supreme Court

192 P.3d 243

COUNTRYWIDE HOME LOANS, INC., A New York Corporation, Appellant/Cross-Respondent, v. Gerald THITCHENER; Katrina Thitchener; Steven Lamb; and Kaitlyn Thitchener, Respondents/Cross-Appellants.

No. 46499.

Supreme Court of Nevada.

September 11, 2008.

Lewis & Roca, LLP, and Daniel F. Polsenberg, Las Vegas; Lionel Sawyer & Collins

and Cam Ferenbach and David N. Frederick, Las Vegas, for Appellant/Cross Respondent.

Marquis & Aurbach and Terry A. Coffing, Terry A. Moore, and Micah S. Echols, Las Vegas, for Respondents/Cross-Appellants.

BEFORE THE COURT EN BANC.

OPINION

By the Court, PARRAGUIRRE, J.:

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 was 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 NRS 42.001. In 1995, the Legislature enacted NRS 42.001, which defines implied malice as a distinct basis for punitive damages in Nevada and establishes a common mental element for implied malice and oppression based on conscious disregard. We now clarify this mental element in accord with its statutory definition and align our jurisprudence with NRS 42.001 in the following two respects. First, we overrule Granite Construction v. Rhyne¹ as a guide to determining the showing required to demonstrate conscious disregard under NRS 42.001(1). Second, we retreat from our past use of the term "unconscionable irresponsibility" to describe the outer limit of culpable conduct that would escape liability for punitive damages in Nevada. Separately, we conclude that NRS 42.007 governs vicarious employer liability for punitive damages and overrule Smith's Food & Drug Centers v. Bellegarde² to the extent that its common law approach conflicts with this statute.

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.³ In the process of preparing the Thitcheners' unit for resale on the mistaken belief that it belonged to another party, Countrywide completely disposed of the Thitcheners' personal belongings.

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 Thitcheners missed their mortgage payments for March, April and May 2002. Their loan was referred to Countrywide's foreclosure department, and Countrywide requested that its contractor inspect the unit. In June 2002, the Thitcheners brought their loan current, and Countrywide halted its foreclosure proceedings.

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 prepared 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, Standley 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 the verdict, the district court trebled the amount of compensatory damages awarded for trespass and conversion, awarded the Thitcheners prejudgment interest on the overall compensatory damage award, in addition to attorney fees and costs, and ordered post-judgment interest to run at a rate of 8.25 percent on the entire judgment principal.

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 presented to the jury.⁴

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...