Hilton Hotels Corp. v. Butch Lewis Productions, Inc.

• Decision Date: 15 November 1993
• Docket Number: No. 23294,23294
• Citation: 109 Nev. 1043,862 P.2d 1207
• Parties: HILTON HOTELS CORPORATION, Appellant, v. BUTCH LEWIS PRODUCTIONS, INC.; Butch Lewis; Michael Spinks; Dynamic Duo, Inc.; Dennis Rappaport and Gerry Cooney, Respondents.
• Court: Nevada Supreme Court

Page 1207

862 P.2d 1207

109 Nev. 1043

HILTON HOTELS CORPORATION, Appellant, v. BUTCH LEWIS PRODUCTIONS, INC.; Butch Lewis; Michael

Spinks; Dynamic Duo, Inc.; Dennis Rappaport and

Gerry Cooney, Respondents.

No. 23294.

Supreme Court of Nevada.

Nov. 15, 1993.

[109 Nev. 1044] Morris, Brignone & Pickering, Las Vegas, for appellant.

Herbert Sachs, Las Vegas, for respondent Dennis Rappaport.

Profeta & Eisenstein, New York City, and Schreck, Jones, Bernhard, Woloson & Godfrey, Las Vegas, for respondents Butch Lewis Productions, Inc., Butch Lewis, Michael Spinks and Dynamic Duo, Inc.

Jones, Jones, Close & Brown, Las Vegas, for respondent Gerry Cooney.

OPINION

PER CURIAM:

Appellant Hilton Hotels Corporation initiated this action against respondents Butch Lewis Productions, Inc. ("BLP"), Butch Lewis, Michael Spinks, Dynamic Duo, Inc. ("Duo"), Dennis Rappaport, and Gerry Cooney for claims involving breach of contract, conspiracy to interfere with contract and intentional interference with contractual relations. After a jury verdict in favor of respondents, Hilton appealed. This court issued an opinion which contains a full recital of the facts. See Hilton Hotels v. Butch Lewis Productions, 107 Nev. 226, 808 P.2d 919 (1991) (Hilton I ). Following remittitur, the claims against all parties except BLP, Lewis and Duo were dismissed on motions for summary judgment. The district court then issued a "final judgment" adverse to Hilton dismissing with prejudice defendants Spinks, Cooney and Rappaport, and also dismissing with prejudice Hilton's tort claims and claim for punitive damages; the judgment also expressed uncertainty with respect to the meaning and effect of this court's opinion in Hilton I. ¹ The referenced final judgment forms the basis for this appeal.

FACTS

This is Hilton's second effort on appeal to resuscitate its claims for damages against BLP, Lewis, Spinks, Duo, Rappaport, and Cooney for loss of the opportunity to present a world heavyweight bout between Spinks and Mike Tyson at the Las Vegas Hilton in May of 1987.

Hilton's complaint originally alleged three causes of action: (1) breach of contract; (2) conspiracy to interfere with contract; and (3) intentional interference with contract. The first trial on these claims resulted in a jury verdict in favor of all defendants indicating that there was no breach of contract. In Hilton's appeal from the judgment entered pursuant to that verdict, we concluded that the district court erred in disallowing rebuttal testimony from then Nevada Athletic Commission Chairman Duane Ford. More importantly, we reversed and remanded the action "for a new trial on Hilton's claim for breach of the implied covenant of good faith and fair dealing." See Hilton Hotels v. Butch Lewis Productions, 107 Nev. 226, 237, 808 P.2d 919, 925 (1991). Thereafter, Hilton petitioned for rehearing or clarification of our opinion to make clear Hilton's right to pursue its tort claims upon retrial of the action. We denied rehearing without clarification. Hilton also sought relief from the district court's rulings by filing an original petition for writ of mandamus which we denied without comment.

Upon remittitur, Cooney, BLP, Lewis, Spinks and Rappaport moved for summary judgment. The district court granted summary judgment as to all parties except BLP, Duo and Lewis. Hilton also filed a motion to amend its complaint which was denied against all parties except BLP, Lewis and Duo (the only remaining parties). On June 10, 1992, the district court denied Hilton's second motion to amend. Then, as mentioned above, the district court dismissed the action against all parties with the exception of BLP, Lewis and Duo, and dismissed Hilton's tort claims and claim for punitive damages. All dismissals were with prejudice and the final judgment reflected uncertainty as to the meaning and effect of this court's opinion in Hilton I.

DISCUSSION

In Hilton I, we reversed in part the judgment against Hilton and remanded the action to the district court for a new trial on Hilton's claim for breach of the implied covenant of good faith and fair dealing. See Hilton, 107 Nev. at 237, 808 P.2d at 925. Respondents contend that our ruling in Hilton I precludes further litigation against any party not privy to the Hilton/Duo contract and forecloses the pursuit of any of the former claims other than that of the alleged breach of the implied covenant of good faith and fair dealing. We are unable to categorically agree.

It is well established within Nevada that every contract imposes upon the contracting parties the duty of good faith and fair dealing. See A.C. Shaw Construction v. Washoe County, 105 Nev. 913, 914, 784 P.2d 9, 9-10 (1989); Ainsworth v. Combined Ins. Co., 104 Nev. 587, 592 n. 1, 763 P.2d 673, 676 (1988), cert. denied, 493 U.S. 958, 110 S.Ct. 376, 107 L.Ed.2d 361 (1989) (covenant applies to every commercial contract). Moreover, it is recognized that a wrongful act which is committed during the course of a contractual relationship may give rise to both tort and contractual remedies. Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 164 Cal.Rptr. 839, 843, 610 P.2d 1330, 1334 (1980). More specifically:

[t]he duty not to act in bad faith or deal unfairly thus becomes a part of the contract, and, as with any other element of the contract, the remedy for its breach generally is on the contract itself. (Citation omitted.) In certain circumstances, breach of contract, including breach of the covenant of good faith and fair dealing, may provide the basis for a tort claim.

Wagenseller v. Scottsdale Memorial Hosp., 147 Ariz. 370, 383, 710 P.2d 1025, 1038 (1985).

In Hilton I, we affirmed the jury's determination that the express terms of the Hilton/Duo contract were not breached; however, we concluded that because the trial court had erroneously excluded potentially crucial rebuttal testimony sought to be introduced by Hilton, the matter had to be reversed in part and remanded for a new trial on Hilton's claim for breach of the implied covenant of good faith and fair dealing. 107 Nev. at 232, 808 P.2d at 922-23. A determination by the jury that the implied covenant was breached will give rise to an award of contract damages. Id. at 232-33, 808 P.2d at 923.

Despite our ruling in Hilton I limiting the contract action to a claim of breach of the implied covenant of good faith and fair dealing, at no point did we conclude or imply that Hilton's tort claims could not be pursued. The gravamen of Hilton's claim is that it entered into a contract for the ultimate purpose of producing a unified heavyweight champion in a culminating match at the Hilton, and that the purpose of the contract was frustrated by deliberate maneuvering to secure more lucrative matches outside the Unification Series scheduled to take place at the Hilton.

In Hilton I we stated:

Bad faith on the part of Lewis and others could have deprived Hilton of benefits it would have received had it not been for Lewis' pulling Spinks out of the Unification Series so as to make "big money" elsewhere. Proof of what Lewis said and did in this regard is critical to the prosecution of this aspect of Hilton's case.

107 Nev. at 235, 808 P.2d at 924 (emphasis supplied).

It is apparent that Lewis would have had great difficulty exercising bad faith to the point of breaching the implied covenant of good faith and fair...