Title: Davis v. Beling

State: nevada

Issuer: Nevada Supreme Court

Document:

128 Nev, Advance Opinion 28
IN THE SUPREME COURT OF THE STATE OF NEVADA

CHERYL DAVIS, AN INDIVIDUAL; No, 53182
AND TRIPLE WIN, LLC, D/B/A |
PLATINUM PROPERTIES GMAC REAL |
ESTATE, A NEVADA LIMITED
LIABILITY COMPANY, FILED
Appellants/Cross-Respondents,

vs.
KRISTEN L. BELING, AN
INDIVIDUAL; AND WILLIAM
DOUGHERTY, JR., AN INDIVIDUAL
AND AS TRUSTEE OF THE
DOUGHERTY-BELING FAMILY |

  

‘TRUST,
Respondents/Cross-Appellants.

Appeal and cross-appeal from a district court judgment in a
real property contract action. Eighth Judicial District Court, Clark
County; Douglas W. Herndon, Judge.'

Affirmed in part, reversed in part, and remanded,

David J. Winterton & Associates, Litd., and David J. Winterton and David
E. Doxey, Las Voga:
for Appellants/Cross-Respondents.

Dziminski & Associates and Brian R. Dziminski, Las Vegas,
for Respondents/Cross-Appellants,

'Senior Judge Joseph. Bonaventure presided over the trial of this
case. District Court Judge Michael P. Villani decided the parties’ pretrial
motions. District Court Judge Douglas W. Herndon decided the parties’
post-trial motions and entered the final judgment.

 

14 -18053)

 
BEFORE SAITTA, HARDESTY and PARRAGUIRRE, Jd.
OPINION

By the Court, SAITTA, J.:

Im this appeal and cross-appeal, we address several issues
arising from a dispute over a series of property transactions. First, we are
asked to construe NRS 48.105, which provides that evidence of offers of
compromise must be excluded when introduced “to prove liability for or
invalidity of the claim or its amount,” but also states that exclusion is not
required “when the evidence is offered for another purpose.” In particular,
we consider whether evidence of compromise offers is admissible for the
purpose of demonstrating a failure to mitigate damages. Applying the
plain language of NRS 48.105, we conclude that compromise offers are not
admissible for this purpose because evidence demonstrating a failure to
mitigate damages necessarily goes to the “amount” of a claim.
Accordingly, the district court did not err in excluding such evidence,

Next, we interpret NRS 645.251, which provides, in pertinent
part, that real estate licensees are “not required to comply with any
principles of common law that may otherwise apply to any of the duties of
the licensee as set forth in NRS 645.252, 645.253 and 645.254."
Specifically, we address whether NRS 645.251 shields real estate licensees
from common law forms of liability. We conclude that although the
statute does not, in all instances, shield real estate licensees from common
law forms of liability, it precludes such liability when the type of conduct
complained of is covered by NRS 645.252, 645.253, or 645.264. Here,
because the fraud-by-concealment claim brought against appellant/cross-

respondent Cheryl Davis by respondents/cross-appellants Kristen Beling

 

 
—

and William Dougherty, Jr. (the Doughertys) is premised on the type of
conduct covered in NRS 645.252-645.254, the district court erred in
entering judgment on this claim. ‘The court did not err, however, in
entering judgment, as to liability, on the Doughertys’ NRS 645.257 claim
that Davis breached the duties imposed by NRS 645.252-645.254. Nor did
the district court err in entering judgment, as to liability, on the
Doughertys’ NRS 645.257 claim against appellant/cross-respondent Triple
Win, LLC, d.b.a, Platinum Properties GMAC Real Estate (Platinum)
because that claim is predicated on a theory of liability not covered in NRS
645,252-645.254,

We next address the damages that are recoverable for a real
estate licensee's breach of the duties set forth in NRS 645.252.645.254, in
light of NRS 645.257's declaration tha
for such violations. We conclude that the term “actual damages” is

\ctual damages” may be recovered

  

synonymous with the term “compensatory damages.” Thus, although
punitive damages may not be recovered under NRS 645.257, we conclude
that compensatory damages are recoverable under the statute in
accordance with the measure of damages that appropriately compensates
the injured party for the losses sustained as a result of the real estate
licensee's violations. In the instant case, the district court did not err in
determining that diminution damages were an appropriate measure of the
Doughertys’ compensatory damages, but it erred in precluding their
recovery of the consequential damages necessary to fully compensate them
for their losses.

Finally, we address whether the Doughertys are entitled to an
award of attorney fees pursuant to the listing and purchase agreements

for the properties at issue. We conclude that because the Doughertys

 

 
successfully defended against the breach of contract claims brought
against them under these agreements, they are entitled to an award of
attorney fees under the terms of these agreements. Consequently, the
district court erred in denying the Doughertys' request for these fees.
FACTS AND PROCEDURAL HISTORY

Background

In 2005, the Doughertys decided to sell their home located on
Augusta Drive in Henderson (the Augusta Property) and build a custom
home in the MacDonald Highlands development in Henderson. The
Doughertys entered into a listing agreement with Davis and Platinum,
whereby Davis would serve as the agent for the listing and sale of the
Augusta Property and Platinum would act as the broker. The Doughertys
explained to Davis that they wished to use the proceeds from the sale of
the Augusta Property in order to finance the acquisition of the lot for their
custom-built home.

‘Thereafter, the Doughertys agreed to sell the Augusta
Property to Chris and Tracy Byrd. The Byrds provided the Doughertys
with an earnest money deposit, and escrow was set to close in a few
months. The Doughertys then located a lot in the MacDonald Highlands
development on which they wished to build their custom home (the
MacDonald Highlands Property). Davis assured the Doughertys that the
Byrds would go through with the purchase of the Augusta Property and,
relying on these assurances, the Doughertys closed on the MacDonald
Highlands Property, despite the fact that the Byrds had not yet closed on
the Augusta Property.

‘The Doughertys needed a place to live during the interim
period between the anticipated sale of the Augusta Property and the

estimated two-year construction of the MacDonald Highlands Property.

 

 
Davis convinced the Doughertys that purchasing a property and then
selling it at a profit after they moved into the MacDonald Highlands
Property would be preferable to renting a residence. Thus, Davis showed
the Doughertys a few properties located in Henderson, including a
residence located on Ping Drive (the Ping Property). The Doughertys
thereafter entered into an agreement to purchase the Ping Property for

$825,000. The Doughertys explained to Davis, however, that it was

 

imperative that the closing of the Ping Property be contingent on the
closing of the Augusta Property because they needed to use the funds from
the sale of the Augusta Property in order to close on the Ping Property.
Contrary to the:

 

instructions, Davis did not make the Doughertys’ offer
on the Ping Property contingent.

‘The planned series of transactions started to unravel when
problems began to threaten the closing of the Augusta Property due to the
Byrds’ difficulty in selling their home. Davis, however, repeatedly
represented to the Doughertys that the sale of the Augusta Property had
successfully closed. In fact, the sale had not closed, and Davis thereafter
called the Doughertys and conceded that the Augusta Property was not
closing. Davis explained to the Doughertys that the Byrds were unable to
sell their home, and, as a result, they could not purchase the Augusta
Property.

The following day, the Doughertys spoke with the Byrds’
lender, who informed the Doughortys that the Byrds still wished to
purchase the Augusta Property, but that they needed three days to obtain

the necessary funds to do so. Immediately thereafter, Davis called the
Doughertys and told them that they needed to close escrow on the Ping
Property or they would lose their earnest money deposit. By this time, the

 

 
Doughertys no longer trusted Davis, and they told her that they did not
wish to close on the Ping Property because the Augusta Property had not
closed. Then, purporting to be acting on behalf of the Byrds, Davis offered
to advance the Doughertys the $150,000 needed to close on the Ping
Property. Davis told the Doughertys that the Byrds would close on the
Augusta Property in a few more days. She then represented that she was
placing the money into escrow on behalf of the Byrds for the Augusta
Property. Relying on Davis's assurances that she had worked out an
arrangement for the Byrds to close on the Augusta Property, the
Doughertys accepted the $150,000 advance and closed on the Ping
Property. Ultimately, the Byrds were unable to successfully close on the
Augusta Property. Afterward, Davis verbally offered to purchase the Ping
Property from the Doughertys, but the Doughertys refused.
Proceedings below

Davis sued the Doughertys under various theories of liability,
including breach of contract, unjust enrichment, and fraud, seeking to
recover the $150,000 that she had advanced to the Doughertys. The
Doughertys countersued Davis for, among other things, negligent
misrepresentation, fraud by misrepresentation and concealment, breach of
fiduciary duty, slander of title, and abuse of process. In addition, the
Doughertys brought a claim against Davis under NRS 645.257, which
provides a statutory cause of action for the victim of a real estate licensee's
breach of the various duties imposed by NRS 645.252-645.254. The
Doughertys also sued Platinum under NRS 645.257, based on a
respondeat superior theory. Platinum filed a third-party complaint
against the Doughertys for breach of the listing and purchase agreements

for the Augusta Property and the purchase agreement for the Ping
Property.

 

 
‘The Doughertys later rejected an offer of judgment made by
Davis. Davis similarly rejected an offer of judgment made by the

Doughertys, and the dispute was scheduled for a jury trial. Around this

  

time, the Doughertys filed a motion in limine to exclude evidence of
Davis's oral offer to buy the Ping Property, asserting that NRS 48,105(1)
requires the exclusion of this evidence. The district court granted the
Doughertys’ motion. Davis, in turn, filed a motion in limine seeking to
prevent the Doughertys from recovering or presenting evidence relating to

their mortgage payments, taxes, insurance, maintenance expenses, and

 

other carrying costs for the Ping Property, offset by their mitigation of
those damages by renting the property. Davis asserted that the
Doughertys may only recover their out-of:pocket damages, and that the
carrying costs for the Ping Property do not fall within this category. Davis
also asserted that the economic loss doctrine bars the recovery of such
damages. The district court agreed, thereby precluding the Doughertys
from recovering their carrying costs, Before the commencement of trial,
Davis requested that the district court dismiss the Doughertys’ causes of
action for fraud and their other common law claims, asserting that such
claims are precluded by NRS 645.251. The district court declined to do so.
Following the parties’ presentation of their respective cases,
the district court dismissed several claims and submitted the remaining
claims to the jury by way of special verdict forms. Specifically, the district
court submitted Davis's claims against the Doughertys for breach of

contract, unjust enrichment, and fraud, along with Platinum's claim
against the Doughertys for breach of contract. The district court also
submitted the Doughertys’ fraud-by-misrepresentation, _fraud-by-
concealment, abuse of process, slander of title, and NRS 645.257 claims

 

 
   

against Davis, as well as the Doughertys’ NRS 645.257 claim against
Platinum.

Before sending the jury to deliberate, the distriet court
provided it with various instructions, including an instruction regarding
the out-of-pocket rule—that is, that the Doughertys’ damages should be
limited to the difference between the value of what they received and the
amount of money that they gave for it. But the special verdict forms that
the district court provided to the jury also suggested to the jury that it
could award diminution damages to the Doughertys on their fraud and
RS 645.257 claims.

‘The jury returned a verdict awarding Davis $115,455 on her
‘unjust enrichment claim. It also awarded the Doughertys $199,558.66 on
their fraud-by-concealment claim against Davis? In addition, the jury
awarded the Doughertys $100,000 in punitive damages on this claim. The
jury also awarded the Doughertys $199,558.66 on their NRS 645.257 claim
against Davis, but the district court remitted this award, reasoning that it
was duplicative of the award on the Doughertys’ fraud-by-concealment
claim, Finally, the jury awarded the Doughertys $15,273.18 on their NRS
645.257 claim against Platinum, representing the amount of commission
Platinum received from the Ping Property transaction, along with $22,500

“This figure represents the Doughertys’ moving expenses ($9,558.66)
plus the diminution in value of the Ping Property—that is, the difference
between the price the Doughertys paid for the Ping Property in 2005
($825,000) and the appraised value of the property at the time of trial in
2008 ($635,000).

 
in punitive damages. The jury rejected all other claims, and the district
court entered judgment on the jury's verdict.

The Doughertys filed a post-judgment motion for attorney
fees, asserting that such an award was authorized by the offer of judgment
rule, as well as the listing and purchase agreements for the Augusta
Property and the purchase agreement for the Ping Property. ‘The district
court awarded attorney fees to the Doughertys under the offer of judgment
rule, but it denied their request for fees under the listing and purchase
agreements. Davis and Platinum now appeal, challenging various aspects
of the district court's judgment. The Doughertys cross-appeal, contending
that the district court erred in limiting the amount of their recoverable
damages and their attorney fees award.

DISCUSSION

As noted, Davis and Platinum raise several contentions on
appeal. Davis first argues that the district court erred in excluding, under
NRS 48.105(1), evidence of her offer to purchase the Ping Property from
the Doughertys. Next, Davis contends that the district court erred in
entering judgment on the Doughertys’ fraud-by-concealment claim
because NRS 645.251 shields her from all liability for common law causes
of action, Platinum similarly contends that the district court erred in
entering judgment on the Doughertys’ NRS 645.257 claim against it
because that claim was predicated on a respondeat superior theory of
liability, which it asserts is precluded by NRS 645.251. Finally, Davis

8The jury also awarded the Doughertys damages on their abuse of
process claim, but the district court remitted this award after the
Doughertys waived their right to these damages.

 

 
on

 

asserts that the district court erred in permitting the jury to award the

 

Doughertys diminution damage:

On cross-appeal, the Doughertys argue that the district court
erred in precluding their recovery of the carrying costs for the Ping
Property. They also assert that the court erred in determining that they
are not entitled to attorney fees pursuant to the listing and purchase
agreements for the Augusta Property and the purchase agreement for the
Ping Property. We address Davis's contentions first.

Davis asserts that the district court erred in excluding
evidence of her offer to buy the Ping Property, under NRS 48.105, because
she introduced this evidence for the purpose of showing that the
Doughertys failed to mitigate their damages. According to Davis, NRS
48.105 does not mandate exclusion in such a circumstance.

Although the district court’s determination of the admissibility
and relevance of evidence is generally reviewed for an abuse of discretion,
Thomas v. Hardwick, 126 Nev. _, __, 231 P.3d 1111, 1117 (2010), “to
the extent the evidentiary ruling rests on a legal interpretation of the
evidence code, de novo review obtains.” Stephans v. State, 127 Nev. __,
__. 262 P.3d 727, 730 (2011). When construing a statute, we first
examine its plain meaning. Arguello v. Sunset Station, Inc., 127 Nev. __.
__. 252 P.3d 206, 209 (2011). In examining the plain meaning of a
statute, we read its provisions as a whole, and give effect to each of its
words and phrases. Id, “When a statute is clear and unambiguous, we

‘We have considered each of Davis's and Platinum's remaining
contentions and conclude that they are without merit.

 

10

 
on

 

give effect to the plain and ordinary meaning of the words and do not
resort to the rules of construction.” Cromer v. Wilson, 126 Nev. __, _.
225 P.8d 788, 790 (2010).

An offer of compromise is an offer by one party to settle a
claim “where an actual dispute or a difference of opinion exists” at the
time the offer is made. Affiliated Mfrs., Inc, v. Aluminum Co. of America,
56 F.3d 521, 527 (Sd Cir. 1995). At the time that Davis offered to buy the
Ping Property from the Doughertys, a dispute between the parties had
arisen, and Davis cannot seriously contend otherwise. When Davis made
her offer, the parties had obtained representation, and as Davis later

testified, “everyone w:

 

screaming litigation.” As such, Davis's offer was
clearly an offer of compromise.

Concerning offers of compromise, NRS 48.105 provides:

1. Evidence of
(a) Furnishing or offering or promising to
furnish; or
(b) Accepting or offering or promising to
accept,

a valuable consideration in compromising or
attempting to compromise a claim which was
disputed as to either validity or amount, is not
admissible to prove liability for or invalidity of the
claim or_its_amount. Evidence of conduct or
statements made in compromise negotiations is
likewise not admissible,

2. This section does not require exclusion
when the evidence is offered for another purpose,
such as proving bias or prejudice of a witness,
negativing a contention of undue delay, or proving
an effort to obstruct a criminal investigation or
prosecution,

(Emphasis added.)

u

 
‘Thus, NRS 48.105(1) requires the exclusion of evidence of
offers of compromise when such evidence is introduced to prove liability or
the amount of a claim. But NRS 48.105(2) qualifies the reach of NRS
48.105(1) by providing that the introduction of this evidence is not
prohibited if offered for “another purpose.” We have not previously
addressed whether evidence of an offer of compromise may be introduced
for the purpose of demonstrating a failure to mitigate damages.

We conclude that compromise offers are not admissible for this
purpose because when evidence of an offer of compromise is used to show a
failure to mitigate damages, such evidence ineseapably goes to the
“amount” of the claim. ‘This type of evidence thus falls within the precise
proscription set forth by NRS 48.105(1)(b). Therefore, pursuant to the
plain language of the statute, offers of compromise are not admissible to
prove a failure to mitigate damages.

Our interpretation of NRS 48.105 finds ample support. When
faced with this issue, federal circuit courts have concluded, after carefully
construing Federal Rule of Evidence 408, the federal counterpart of NRS
48.105, that offers of compromise are not admissible on the issue of
mitigation. For ins!

 

nee, in Sto v tal Center, P.C,
the United States Court of Appeals for the Sixth Circuit reasoned that
“mitigation necessarily goes to the amount of a claim,” and therefore,
admitting offers of compromise on the issue would “violate ] Rule 408 on
its face.” 480 F.3d 791, 798 (6th Cir. 2007). Similarly, in Pierce v. FR.
Tripler & Co,, the United States Court of Appeals for the Second Circuit
concluded that “[elvidence that demonstrates a failure to mitigate

damages goes to the ‘amount’ of the claim and thus, if the offer was made

 

 
een i

 

in the course of compromise negotiations, it is barred under the plain
language of Rule 408.” 956 F.2d 820, 826-27 (2d Cir. 1992).5

Moreover, the admission of evidence of compromise offers
would not only violate the plain language of NRS 48.105(1)(b), it would
undermine one of the statute's undisputed purposes, specifically, to
prevent evidence of settlement efforts from “haunt[ing] a future legal
proceeding.” Morrison v, Beach City LLC, 116 Nev. 34, 39, 991 P.24 982,
985 (2000) (quoting Han v. Yang, 931 P.2d 604, 613 (Haw. Ct. App. 1997).
Because the issue of mitigation centers on whether the injured party
exercised reasonable care to avoid unnecessary damages, see Automatic
Merchandisers, Inc, v. Ward, 98 Nev. 282, 284, 646 P.2d 553, 554 (1982), if
evidence of compromise offers were admitted to show a failure of

mitigation, then predictably, a substantial dispute would a1

 

whether the offer was reasonably refused.

SDavis asks that we follow a contrary set of federal decisions and
secondary authorities that have suggested that evidence of offers of
compromise is admissible on the issue of mitigation. Davis principally
relies upon Bhandari v. First National Bank of Commerce, 808 F.2d 1082
(6th Cir. 1987), and Urico v. Parnell Oil Co., 708 F.2d 852 (Ist Cir. 1983).
We find the Bhandari decision unpersuasive because it contains virtually
no analysis and implies, incorrectly, that Rule 408 merely “excludes
evidence of settlement negotiations if offered to prove or disprove
liability.” 808 F.2d at 1103, ‘The Urico case is likewise unconvincing in
that it does not address the actual language of FRE 408 to reach the
conclusion that the rule provides for “flexibility” in the admissibility of
compromise offers. 708 F.2d at 854. In short, we are not persuaded to
follow these decisions. Instead, we apply NRS 48.105 according to its
plain language, as the better-reasoned federal decisions hold, and as our
well-established rules of statutory interpretation mandate. See Arguello,
127 Nev. at __, 252 P.3d at 209; Cromer, 126 Nev. at __, 225 P.8d at 790.

 

13,

 
 

‘The facts of this case dramatically illustrate this concern.
‘There is absolutely no indication that Davis was in a position to produce,
on a moment's notice, the $825,000 necessary to purchase the Ping
Property. And, in view of Davis's dishonesty in the parties’ previous
dealings, it can hardly be said that it was unreasonable for the Doughertys
to refuse to enter into yet another transaction involving her. ‘Thus, if

evidence of Davis

 

offer of compromise were admitted, the Doughertys
would have every reason to show just how tenuous the offer was, and a
lengthy dispute over the issue could ensue, which is an outcome that NRS
48.105 was specifically intended to prevent. See Morrison, 116 Nev. at 39,
991 P.2d at 985,

We also share the Second Circuit's concern in Pierce that the
admission of such evidence would inhibit the efficient administration of

 

justice by spurring a “rash of motions for disqualification of a party's

chosen counsel who would likely become a witness at trial,” 955 F.2d at

 

828. As the court explained, because it is commonplace for attorneys to be
closely involved in the parties’ settlement efforts before trial, “many
attorneys would be forced to testify as to the nature of the discussions and
thus be disqualified as trial counsel.” Id,

We therefore conclude that under NRS 48.105, evidence of
offers of compromise is not admissible to demonstrate a failure to mitigate
damages. Accordingly, the district court did not err in excluding evidence
of Davis's offer to purchase the Ping Property from the Doughertys.

‘The Doughertys' fraud-by-concealment and NRS 645.257 claims

Davis asserts that the district court erred in entering
judgment on the Doughertys’ fraud-by-concealment claim because, as she
interprets it, NRS 645.251 shields real estate licensees from any and all
‘common law forms of liability. Similarly, Platinum asserts that NRS

4

  

 
4

645.251 precludes all common law forms of liability, and that the district
court thus erred in entering judgment against it on the Doughertys’ NRS
645.257 claim, as this claim is premised on respondeat superior—a
common law theory of liability.

“{QJuestions of statutory construction, including the meaning
and scope of a statute, are questions of law, which this court reviews de
novo.” City of Reno v. Reno Gazette-Journal, 119 Nev. 55, 68, 63 P.3d
1147, 1148 (2003). However, the fact-finder's “fact-based conclusions of
law are entitled to deference, and... will not be disturbed if supported by
substantial evidence.” Manwill v. Clark County, 123 Nev. 238, 241, 162
P.8d 876, 879 (2007).

NRS 645.251 provides, in relevant part, that “[a] licensee is
not required to comply with any principles of common law that may
otherwise apply to any of the duties of the licensee as set forth in NRS
645.252, 645.258 and 645.254.” NRS 645.252,

 

8 forth the general duties
sees, NRS 645,253 describes the
duties of nondisclosure of licensees affiliated with the same brokera
Lastly, NRS 645.254 provides additional duties of care, disclosure, and

nondisclosure of licensees who have entered into a brokerage agreement to

 

of care and disclosure of real estate

 

represent a client in a real estate transaction,

Although we conclude that NRS 645.251 alters the traditional
landscape of liability with respect to real estate licensees, we disagree
with Davis's and Platinum’s contention that the statute precludes, in all
instances, common law forms of liability, such as fraud. Simply put, NRS
645.251 does not state that real estate licensees are shielded from all
forms of common law liability, and therefore, Davis's and Platinum's
interpretation of NRS 645.251 is overbroad and improperly reads

15

 

 
language into the statute. See Szvdel v. Markman, 121 Nev. 453, 457, 117
P.3d 200, 202 (2005) (‘When the language of a statute is clear on its face,
this court will deduce the legislative intent from the words used.

Nonetheless, NRS 645.251 expressly limits a real estate

 

licensee's duties of care and disclosure to those specifically set forth in
NRS 645.252.645.254. NRS 645.251 would be rendered meaningless if a
party could circumvent this limitation by simply casting a claim for a
violation of NRS 645.252-645.254 as a common law claim, We therefore
conclude that NRS 645.251 precludes common law claims against real
estate licensees to the extent that the type of conduct forming the basis of
such a claim is the type of conduct proscribed in NRS 645.252.645.254
Stated differently, NRS 645.251 displaces common law forms of liability
when the type of conduct complained of overlaps with the conduct covered
by NRS 645,252-645.254. Thus, although NRS 645.251 does not abrogate
all common law claims for a real estate licensee's wrongful conduct, such
claims remain viable only if the type of conduct complained of is not
covered by NRS 645,252-645.254,

‘The Doughertys’ fraud-by-concealment claim is predicated on
Davis's failure to disclose material information regarding their various
real estate transactions. The duties of disclosure of real estate licensees
are covered by NRS 645.252(1) and NRS 645.254(5). Thus, the type of
conduct forming the basis of the Doughertys’ fraud-by-concealment claim
overlaps with the type of conduct covered by NRS 645.252(1) and NRS
645.254(6), and therefore, as a matter of law, this conduct cannot form the
basis of a common law fraud-by-concealment claim against Davis.
Consequently, we conclude that the district court erred in entering

judgment on this claim. However, as substantial evidence supports the

 

 
 

jury’s finding in favor of the Doughertys on their NRS 645.257 claim
against Davis for breach of the statutory duties set forth in NRS 645.252-
645.264, the district court did not err in entering judgment, as to liability,
on the statutory claim.

In contrast to the type of conduct forming the basis of the
Doughertys’ fraud-by-concealment claim, respondeat superior liability is
not covered in NRS 645.252, 646.253, or 645.254. Indeed, those statutes
have nothing to do with such liability, Platinum's contention that NRS
645,261 precludes its respondeat superior liability for Davis's wrongdoing
is therefore without merit. Accordingly, because substantial evidence
supports the jury’s finding that Platinum is liable under a respondeat
superior theory, the district court did not err in entering judgment, as to
liability, on the Doughertys’ NRS 645,257 claim against Platinum,

‘The Doughertys’ recoverable damages
Davis contends that the district court erred in permitting the

 

jury to award diminution damages to the Doughertys, Specifically, she
asserts that the Doughertys’ recovery should be measured by their out-of-
pocket losses, Davis further argues that the diminution in the value of the
Ping Property is an improper measure of the Doughertys’ damages
because the drop in value of the Ping Property was proximately caused by
the decline in the Las Vegas real estate market, not her actions.

Davis also argues that the Doughertys waived any claim to
damages in the purchase agreements for the Augusta Property and the
Ping Property. This argument is meritless. The waiver provisions
contained in the purchase agreements relate to claims arising from defects
in the condition of the properties, not intentional torts or a breach of
statutory duties.

V7

 
nn

 

On cross-appeal, the Doughertys argue that the district court
erred in precluding their recovery of the carrying costs for the Ping
Property. They further argue that the district court erred in determining
that their recovery of these damages is barred by the economic loss
doctrine.

the
damages that are recoverable on the Doughertys’ NRS 645.257 claims and

As both parties’ arguments require that we addre:

 

the measure that should be used to compute those damages, we take up
these issues together. “Whether a party is ‘entitled to a particular

 

we of damages is a question of law’ reviewed de novo.” Dynalectric
Company v. Clark & Sullivan, 127 Nev. _, __, 256 P.3d 286, 288 (2011)
(quoting Toscano v, Greene Music, 21 Cal. Rptr. 34 732, 736 (Ct. App.
2004).
RS 645.257
With respect to the damages that may be recovered under
NRS 645.257, the statute provides, in pertinent part:

A person who has suffered damages as the
proximate result of a licensee's failure to perform
any duties required by NRS 645.252, 645.253 or
645.254 may bring an action against the
licensee for the recovery of the person's actual
damages,

idded.)

‘The Legislature did not define the term “actual damages,” nor

(Empha:

 

have we previously interpreted it. Typically, “actual damages” are defined
as “[a]n amount awarded to a complainant to compensate for a proven
injury or loss.” Black’s Law Dictionary 445 (9th ed. 2009). The term is
often “[a]lso termed compensatory damages.” Id, Thus,
is simply another way of stating “compensatory damages.” Indeed, the

“actual damages”

 

18

 
 

term is generally understood by courts to be synonymous with
“compensatory damages,” see, e.g., Saunders v. Taylor, 50 Cal. Rptr. 2d
395, 398 (Ct. App. 1996), and therefore, this is how we believe it should be
construed, See Beazer Homes Nevada, Ine. v. Dist, Ct,, 120 Nev. 575, 580-
81, 97 P.3d 1132, 1135-36 (2004) (“When a legislature adopts language
that has a particular meaning or history, rules of statutory
construction ... indicate that a court may presume that the legislature
intended the language to have meaning consistent with previous
interpretations of the language.”), It follows that, linguistically, the term
simply operates to distinguish compensatory damages from other broad
types of damages, such as punitive damages. Accordingly, we conclude
that although punitive damage
brought pursuant to NRS 645.257, the Legislature intended to permit the

 

may not be recovered for statutory claims

recovery of compensatory damages for such actions, Below, we address
the appropriate measure of compensatory damages for the Doughertys!
NRS 645,257 claims,
Diminution damages

As previously noted, Davis contends that the Doughertys’
compensatory damages should not be measured by their diminution
damages, but instead should be ascertained by their out-of-pocket losses,
which is a measure of damages used in fraud cases. While we agree that,
under the particular facts of this case, it is appropriate to determine the
Doughertys’ compensatory damages under NRS 645.257 by general
reference to the measure of damages for fraud, Davis's contention that this
means the Doughertys’ recovery is limited to their out-of-pocket losses
does not withstand scrutiny.

To be sure, the out-of-pocket measure, which, in the

misrepresentation context, is comprised of “the difference between what

19

 
ono ae

[the defrauded party} gave and what he actually received,” is frequently
used to compute the damages for fraud. Collins v. Burns, 103 Nev. 394,
398.99, 741 P.2d 819, 822 (1987). The benefitof-the-bargain measure,
which consists of “the value of what (the defrauded party] would have
received had the representations been true, less what he actually
Id. at
398, 741 P.2d at 822. “Sometimes, however, neither the out-of-pocket nor

received,” is also often utilized to calculate damages in fraud case

 

benefit-of-the-bargain measure is particularly helpful or appropriate.”
Strebel v. Brenlar Investments, Inc., 37 Cal. Rptr. 34 699, 705 (Ct. App.

2006). As the California Court of Appeal has observed, these measures

 

 

are often mistakenly portrayed “as being the sole antagonists on the
battlofield of damages when at times neither is truly applicable.”
Overgaard v. Johnson, 137 Cal. Rptr, 412, 413 (Ct. App. 1977).

In Strebel, the court explained that a circumstance in which
the out-of-pocket rule and the benefit-of-the-bargain measure may both be
inapplicable is where, as here, “the facts that were fraudulently
concealed ... [have] nothing to do with the value of the [property].” 37
Cal. Rptr. 3d at 705, Accordingly, in Strebel, the court concluded that a
homeowner who was fraudulently induced by his real estate agent into
selling his home was properly awarded damages constituting the
appreciation that he would have accrued had he not sold his home, rather
than his more limited out-of-pocket damages. [d, at 706.

In reaching this conclusion, the Strebel court rejected the
same argument that Davis advances here, namely, that “damages
proximately caused by fraud are determined as of the date when the fraud
took effect—not by a later increase or decline in value.” Id, (internal

 

quotation marks omitted). The court rejected this argument for many

20

 

 
reasons, First and foremost, “measuring [the homeowner's) damages at
the time of the sale would provide no compensation for the most
significant portion of the loss he suffered as a result of defendants’ fraud.”
Id. at 707, Next, the fraud was perpetrated by a real estate agent—a
fiduciary that has a broad responsibility to compensate his or her clients.
Id. at 708. Additionally, in contrast to situations involving a tortfeasor
who merely acts with negligence, “[alllowing recovery for lost

appreciation . .. provide[s] a significant deterrent to a real estate agent

 

fraudulently misleading prospective buyers under similar circumstances
in the future.” Id, Finally, the jury was correctly instructed on the issue
of proximate cause, and substantial evidence supported the jury's finding
that the homeowner's lost appreciation damages were substantially
related to the defendants’ fraud. Id, We find the Strebel court's analysis
sound and instructive on the appropriate measure of compensatory
damages in this case because measuring damages based on loss of
appreciation is conceptually analogous to measuring damages based on
diminution.

Here, as in Strebel, the vast majority of the Doughertys’ losses
wore incurred after the date of Davis's wrongdoing. Rigidly measuring the
Doughertys’ damages as of the date of Davis's transgressions would thus
defeat the irrefutable goal of compensatory damages. See Hanneman v,
Downer, 110 Nev. 167, 172-73, 871 P.2d 279, 288 (1994) (“[DJamages are
awarded to make the aggrieved party whole "). And, as in Strebel,
Davis is a fiduciary with a heightened responsibility to compensate the
clients that she deceived. See Holland Rlty, v. Nev, Real Est. Comm'n, 84
Nev. 91, 97, 436 P.2d 422, 425 (1968) (the consequences of a real estate
licensee's breach of trust are the same as those “that are provided for a

 

 
disloyal or recreant trustee"); Pepitone v. Russo, 134 Cal. Rptr. 709, 711
(Ct. App. 1976) (“{TJhe faithless fiduciary is obligated to make good the
full amount of the loss of which his breach of faith is a cause.”). Finally, as
in Strebel, Davis did not act with mere negligence; rather, the record
shows that she acted intentionally, and she will therefore be deterred from
misleading clients in the future if she is made to compensate the
Doughertys for their diminution damages. Cf, Safeco Ins. Co. v. J & D
Painting, 21 Cal. Rptr. 24 903, 907 (Ct. App. 1993) (rejecting award of
diminution damages for a negligence claim); Goodrich & Pennington v.
LR.Woolard, 120 Nev. 777, 781, 101 P.8d 792, 795 (2004) (indicating that
liability for negligent misrepresentation “may not extend to losses arising
from a subsequent downturn in the real estate market"). Accordingly, we
conclude that the district court did not err in determining that the
diminution in the value of the Ping Property was an appropriate measure
of compensatory damages for the Doughertys’ NRS 645.257 claim:

Consequential damages
We now turn to the Doughertys’ contention that the district

 

court erred in precluding their recovery of the carrying costs for the Ping

"We caution that a party seeking to recover diminution damages
may not unfairly profit from a defendant's wrongdoing by delaying filing
suit during an economic downturn. See Strebel, 37 Cal. Rptr. 3d at 709.
Davis does not, however, advance any argument that the Doughertys did
so here.

We also note that in order to prevent a double recovery, any
damages the Doughertys are awarded should be reduced by the amount of
payments that they received from renting the Ping Property. See
generally Elyousef v, O'Reilly & Ferrario, LLC, 126 Nev. __, _, 245 P.8d
547, 549 (2010) (“[A] plaintiff can recover only once for a single injury.”).

 

 
 

Property. The Doughertys assert that these costs constitute consequential
damages that may be recovered, in addition to diminution damages, in
order to fully compensate them for their losses.

‘As a leading remedies treatise explains, in order to fully and
fairly compensate the victim of fraud, he or she “may recover special or
consequential damages caused by the misrepresentation, in addition to the
recovery under the appropriate general damages measure.” 2 Dan B.
Dobbs, Law of Remedies § 9.2(3) (2d ed. 1993),

Consequential damages include items of expense
reasonably incurred to minimize the effects of the
fraud, damages caused to other property suffered
because of the fraud, travel expenses incurred to
deal with the problem, commissions paid or added
tax burdens, and other items of loss or expense not,
adequately reflected in the general damages
recovery based on market value of the property
itself,

Id, (footnotes omitted).

Here, the carrying costa for the Ping Property are damages
that the Doughertys incurred to minimize the effects of Davis's deceptions.
It was preeminently reasonable for the Doughertys to obtain property
insurance for the Ping Property, pay the taxes and mortgage on the
property, and maintain the property. Indeed, if they had not done so, they
would likely be deemed to have failed to mitigate their damages. ‘The
Doughertys’ carrying costs are thus consequential damages that are a

recoverable component of their compensatory damages.®

‘We note that consequential damages may not be awarded when

they are duplicative of the general damages awarded—that is, when they

“have been accounted for already by the general damages recovery.” 2
continued on next page .

23

 

 
on

‘The economic loss doctrine

We also agree with the Doughertys’ contention that the
district court erred in determining that their recovery of these carrying
costs is barred by the economic loss doctrine. The economic loss doctrine is
a rule of judicial creation that, broadly speaking, “marks the fundamental
boundary between contract law, which is designed to enforce the
expectancy interests of the parties, and tort law, which imposes a duty of
reasonable care and thereby [generally] encourages citizens to avoid
ing physical harm to others.” Terracon Consultants v, Mandalay
Resort, 125 Nev. 66, 72-73, 206 P.3d 81, 86 (2009) (alteration in original)
(quoting Calloway v, City of Reno, 116 Nev. 250, 256, 998 P.2d 1259, 1263
(2000), overruled on other grounds by Olson v. Richard, 120 Nev, 240, 241-
44, 89 P.3d 31, 31-93 (2004)). Consistent with this purpose, the doctrine

 

 

primarily functions to bar the recovery of purely monetary losses in
certain products liability and unintentional tort actions. Id, at 78, 206
P.3d 86.

The economic loss doctrine does not, however, bar the recovery
of purely economic losses when the defendant intentionally breaches a
duty that is imposed independently of the obligations arising from
contract. Bernard v. Rockhill Dev. Co., 103 Nev. 132, 135, 734 P.2d 1238,
1240 (1987); see Giles v. General Motors Acceptance Corp., 494 F.3d 865,

 

continued

Dan B. Dobbs, Law of Remedies § 9.2(3) (2d ed. 1993). Here, the carrying
costs of the Ping Property compensate the Doughertys for a component of
their losses that are not reflected by the diminution measure. As such, the
Doughertys’ carrying costs are not duplicative.

 

24

 

 

 
879 (9th Cir. 2007) (meticulously analyzing Nevada's

economic loss

 

doctrine jurisprudence and explaining that in Nevada, as in most
jurisdictions, the doctrine does not bar claims “where the defendant had a
duty imposed by law rather than by contract and where the defendant's
intentional breach of that duty caused purely monetary harm to the
plaintiff’). After all, it is often the case that claims stemming from a

defendant's intentional wrongdoing, “such as fraud and conversion{,] exist
to remedy purely economic losses.” Id, at 875 (quoting Grynberg v.
Questar Pipeline Co,, 70 P.3d 1, 11 (Utah 2003),

Here, although the parties had agreements regarding the
Augusta Property and the Ping Property, the Doughertys’ NRS 645.257
claims are not based upon a breach of an obligation arising from those
agreements. Rather, the Doughertys’ NRS 645.257 clai

 

8 are predicated

 

upon Davis's intentional breach of separate duties, distinct from those

 

arising from the parties’ contractual dealings, not to violate the statutory
provisions governing real estate licensees, ‘The economic loss doctrine,
therefore, does not apply to the Doughertys’ NRS 645.257 claims.
Consequently, we conclude that the district court erred in precluding the
Doughertys from recovering the carrying costs for the Ping Property.

‘The Doughertys’ recovery of attorney fees pursuant to the parties’ listing
and purchase agreements

‘The Doughertys next argue that the district court erred in
determining that they are not entitled to an award of attorney fees

 

pursuant to the listing and purchase agreements for the Augusta Property
and the purchase agreement for the Ping Property. In particular, they
assert that although the district court awarded them attorney fees under

the offer of judgment rule, they are entitled to an additional award of fees

 

 
a

under the terms of these agreements for their successful defense of Davis's
and Platinum's breach of contract actions.

While the district court's award of attorney fees is typically
reviewed for an abuse of discretion, Kahn v. Morse & Mowbray, 121 Nev.
464, 479, 117 P.3d 227, 238 (2006), our plenary review is implicated when
questions of law, such as in the interpretation of a contract, are at issue.
Benchmark Insurance Company v, Sparks, 127 Nev. __, __, 254 P.3d
617, 620 (2011); Valley Elec. Ass'n v. Overfield, 121 Nev. 7, 9, 106 P.8d
1198, 1199 (2005).

In general, a district court may not award “attorney
fees... unless authorized to do so by a statute, rule or contract.” U.S,
Design & Constr, v, LB.EW. Local 357, 118 Nev. 468, 462, 50 P.8d 170,
173 (2002). Parties are free to provide for attorney foes by express:
contractual provisions. See Musso v. Binick, 104 Nev. 613, 614, 764 P.2d
477, 47 (1988). The objective in interpreting an attorney fees provision,
as with all contracts, “is to discern the intent of the contracting parties.”
Cline_v. Rocky Mountain, Inc, 998 P.24 946, 949 (Wyo. 2000).
“(T]raditional rules of contract interpretation [are employed] to accomplish
that result.” Id, Therefore, the initial focus is on whether the language of
the contract is clear and unambiguous; if it is, the contract will be enforced
as written. Ellison v, C.S,A.A,, 106 Nev. 601, 603, 797 P.2d 975, 977
(1990).

 

Here, the Augusta Property listing agreement provide:

ATTORNEYS FEES: In the event suit is brought

by either party to enforce this Agreement, the

prevailing party is entitled to court costs and
reasonable attorneys fees.

Likewise, the purchase agreements for the Augusta Property

and the Ping Property each state:

 

26

 

 
 

Should any party hereto retain counsel for the

purpose of initiating litigation to enforce or

prevent the breach of any provision hereof, or for

any other judicial remedy, then the prevailing

party shall be entitled to be reimbursed by the

losing party for all costs and expenses incurred

thereby, including, but not limited to, reasonable

attorneys fees and costs incurred by such

prevailing party.

‘The language of these agreements is clear and unambiguous.
All three agreements provide, in straightforward language, that in the
event suit is brought to enforce the agreements, the prevailing party is
entitled to attorney fees incurred in defense or prosecution of the action.
‘Thus, because the Doughertys successfully defended against Davis's and
Platinum's breach of contract actions, pursuant to the clear language of
these agreements, the Doughertys are entitled to recover reasonable
attorney fees incurred in defense of those particular claims. See Vallev
Elec. Ass'n, 121 Nev. at 10, 106 P.3d at 1200 (explaining that parties
“prevail” if they succeed on any substantial aspect of the case and noting
that the term “prevailing party” “is broadly construed so as to encompass
plaintiffs, counterclaimants, and defendants"). Accordingly, we conclude
that the district court erred in denying the Doughertys’ motion for

attorney fees under these agreements?

"We instruct the district court that the Doughertys are only entitled
to receive additional fees beyond those that they already received under
the offer of judgment rule. In other words, the court should ensure that
the Doughertys do not receive a double recovery of attorney fees.

27

 

 
CONCLUSION

We reverse the district court's judgment on the Doughertys’
fraud-by-concealment claim. We affirm the district court's judgment, as to
liability, on the Doughertys’ NRS 645.257 claims against Davis and
Platinum, but vacate the damages awarded and remand those claims for
further proceedings consistent with this opinion. The district court's

judgment is affirmed in all other respects. Finally, we reverse in part the

 

district court's post-judgment order partially denying the Doughertys’
motion for attorney fees and direct the district court to determine the
reasonable amount of attorney fees to which the Doughertys are entitled

pursuant to the parties’ listing and purchase agreements.

 

Parraguirre