Webb v. Shull

• Decision Date: 01 March 2012
• Docket Number: No. 55153.,55153.
• Citation: 270 P.3d 1266,128 Nev. Adv. Op. 8
• Parties: Scott J. WEBB, an Individual, Appellant/Cross–Respondent, v. Harry H. SHULL, an Individual, Respondent,andCelebrate Properties, LLC, a Nevada Limited Liability Company, Respondent/Cross–Appellant.
• Court: Nevada Supreme Court

128 Nev. Adv. Op. 8

270 P.3d 1266

Scott J. WEBB, an Individual, Appellant/Cross–Respondent,

v.Harry H. SHULL, an Individual, Respondent,andCelebrate Properties, LLC, a Nevada Limited Liability Company, Respondent/Cross–Appellant.

No. 55153.

Supreme Court of Nevada.

March 1, 2012.

Maddox, Isaacson & Cisneros, LLP, and Norberto J. Cisneros, Las Vegas, for Appellant/Cross–Respondent.

Coleman Law Associates and Edward S. Coleman, Las Vegas, for Respondent and Respondent/Cross–Appellant.

BEFORE DOUGLAS, HARDESTY and PARRAGUIRRE, JJ.

OPINION

By the Court, HARDESTY, J.:

This is an appeal and cross-appeal from a district court judgment awarding appellant homebuyer treble damages against respondent seller, a limited liability company, but refusing to find that the individual respondent, a former manager of the limited liability company, is liable for the judgment as the company's alter ego.

We first consider the seller's cross-appeal, in which we address whether the district court's award of treble damages under NRS 113.150(4), a statute which awards treble damages for a seller's delayed disclosure or nondisclosure of property defects, requires a predicate finding of willfulness, or mental culpability. In this case, the district court did not make a finding concerning the seller's statutory liability that it acted willfully. Because we conclude that no such mental state was required, we affirm the district court on this issue. We conclude that the Legislature has the authority to establish the elements and measure of damages in a statutorily created claim. Thus, when a statute lacks an express or implicit mental culpability element, we presume that the Legislature intended to omit such an element. Furthermore, deferring to legislative intent, we decline to imply a heightened level of mental culpability to a statute that is not punitive in nature.

We also briefly address the district court's denial of appellant's assertion that the individual manager is the alter ego of the company. But because the district court in this case failed to explain its reasoning for denying alter ego status, we are unable to review the alter ego issue. Accordingly, we affirm in part and vacate in part the district court's judgment, and we remand this matter to the district court on the alter ego issue.

FACTS AND PROCEDURAL HISTORY ¹

Appellant/cross-respondent Scott Webb purchased a home from respondent/cross-appellant Celebrate Properties, LLC. Celebrate was initially co-managed by respondent Harry Shull and another person, but management was later transferred to two companies, one of which was also managed by Shull.

Unbeknownst to Webb, the home had been sold once before. The initial purchasers of the home discovered soil-related construction defects and, pursuant to NRS Chapter 40, served notice of the construction defects, attaching an expert report in support of their claims. To settle that matter, respondents purchased the home back from the initial purchasers. In the repurchase, however, Celebrate could not obtain proper financing, so Shull purchased the home in his own name and then sold the residence to Celebrate for one dollar, with Shull's name remaining on the mortgage. The soil problems were not addressed, nor were they disclosed to Webb prior to purchase on the standard disclosure forms provided to him or otherwise, in violation of statutes that require such disclosures.

Upon discovering problems with the soil, Webb sued respondents, alleging various claims regarding the failure to disclose the soil-related construction defects and arguing that Shull was the alter ego of Celebrate. Webb sought, among other things, treble damages pursuant to NRS 113.150(4), a statute that awards treble damages for a seller's nondisclosure or delayed disclosure of known property defects. The district court found that Celebrate made negligent misrepresentations about the soil defects and failed to disclose them, and the court awarded treble damages under NRS 113.150(4). The district court also concluded, however, that Shull was not the alter ego of Celebrate and consequently rendered the judgment against Celebrate only. Webb appeals, challenging the district court's alter ego determination; Celebrate cross-appeals to challenge the award of treble damages. We address the cross-appeal first.

DISCUSSION

NRS 113.150 governs remedies for a seller's delayed disclosure or nondisclosure of defects in a sale of residential property. NRS 113.150(4) provides, in pertinent part, that with limited exceptions not applicable here, treble damages are warranted when a seller sells residential property without disclosing known defects:

if a seller conveys residential property to a purchaser without complying with the requirements of NRS 113.130 or otherwise providing the purchaser ... with written notice of all defects in the property of which the seller is aware, and there is a defect in the property of which the seller was aware before the property was conveyed to the purchaser and of which the cost of repair or replacement was not limited by provisions in the agreement to purchase the property, the purchaser is entitled to recover from the seller treble the amount necessary to repair or replace the defective part of the property, together with court costs and reasonable attorney's fees....

Here, the district court awarded Webb treble damages on the ground that Celebrate was aware of the soil defects and breached its duty to disclose them. However, while the district court denied relief on Webb's claim for intentional misrepresentation, it did not make a finding that Celebrate acted willfully or intentionally in awarding damages under NRS 113.150(4). On cross-appeal, Celebrate argues that the district court erred when it awarded treble damages without finding grossly negligent, reckless, or intentional misconduct, because such a finding is required due to the treble damages' punitive nature. In response, Webb argues that because no level of mental culpability is mentioned in the statute, and because the statute states that the purchaser is “entitled to” treble damages for an undisclosed defect, the district court must award treble damages, regardless of the seller's mental state.

NRS 113.150(4) does not expressly or implicitly require a mental culpability level

This court reviews issues of statutory construction de novo. Hardy Companies, Inc. v. SNMARK, LLC, 126 Nev. ––––, ––––, 245 P.3d 1149, 1153 (2010). When interpreting a statute, we first look to its language, and “[w]hen the language ... is clear on its face, ‘this court will not go beyond [the] statute's plain language.’ ” J.E. Dunn Nw. v. Corus Constr. Venture, 127 Nev. ––––, 249 P.3d 501, 505 (2011) (second alteration in original) (quoting Great Basin Water Network v. State Eng'r, 126 Nev. ––––, ––––, 234 P.3d 912, 918 (2010)).

The language of NRS 113.150(4) lacks any reference to the seller's mental state. Confronting a similar issue, the United States Supreme Court declined to infer an intent requirement into a statute that did not expressly or implicitly contain such a requirement. Dean v. United States, 556 U.S. 568, ––––, 129 S.Ct. 1849, 1853, 173 L.Ed.2d 785 (2009). The Supreme Court explained that it “ ‘ordinarily resist[s] reading words or elements into a statute that do not appear on its face.’ ” Id. at ––––, 129 S.Ct. at 1853 (quoting Bates v. United States, 522 U.S. 23, 29, 118 S.Ct. 285, 139 L.Ed.2d 215 (1997)). Thus, because the statute did “not require that the [action at issue] be done knowingly or intentionally, or otherwise contain words of limitation,” id. at ––––, 129 S.Ct. at 1853, and because nothing in the statute's syntax or structure suggested that intent was required, the Court declined to “contort[ ] and stretch[ ] the statutory language to imply an intent requirement.” Id. at ––––, 129 S.Ct. at 1854. Similarly, NRS 113.150 does not expressly require that the seller's nondisclosure be knowing or intentional, or otherwise contain words of limitation. Further, the statute's structure supports our conclusion that no heightened level of mental culpability is required. NRS 113.150(5) provides exceptions to the provision entitling a purchaser to treble damages, applicable in instances in which the seller relied on certain government or contractor statements in omitting information regarding a property defect:

A purchaser may not recover damages from a seller pursuant to subsection 4 on the basis of an error or omission in the disclosure form that was caused by the seller's reliance upon information provided to the seller by:

(a) An officer or employee of this State or any political subdivision of this State in the ordinary course of his or her duties; or

(b) A contractor, engineer, land surveyor, certified inspector as defined in NRS 645D.040 or pesticide applicator, who was authorized to practice that profession in this State at the time the information was provided.

If intent were required to award treble damages in the first instance, there likely would be no need to include these exceptions for relying on government or contractor statements, because doing so would automatically negate the intent requirement. See Southern Nev. Homebuilders v. Clark County, 121 Nev. 446, 449, 117 P.3d 171, 173 (2005) (explaining that this court interprets statutory provisions in harmony with the statutory scheme and to avoid absurd results). Accordingly, we conclude that the treble damages provision of NRS 113.150 does not expressly or implicitly require a heightened level of mental culpability.

Treble damages awarded under NRS 113.150(4) are remedial, not punitive

Nonetheless, Celebrate argues that even if NRS 113.150(4) is silent on a mental culpability requirement, the Legislature must have intended to include such a requirement because treble damages are punitive in nature, and obtaining punitive damages requires proof of intentional wrongdoing. See, e.g., NRS 42.005(1) (...