Court Opinion

ID: 8044972
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:51:32.439425+00
Date Added: 2024-06-11T16:37:26.766977
License: Public Domain

Springer, J.,
with whom Gunderson, C. J.,
agrees, dissenting:
I would affirm the trial court’s judgment as it stands except that I would remand so that the trial court could make a definitive ruling on the issue of punitive damages.
The trial court found, as a matter of law, that respondent Leon Rockwell, Jr., was guilty of breach of trust and fraud against the appellants. Under NRS 42.010 punitive damages could have been awarded. The question of whether punitive damages should be awarded is left solely to the discretion of the fact finder, Midwest Supply, Inc. v. Waters, 89 Nev. 210, 213, 510 P.2d 876, 879 (1973); however, as pointed'out by appellants, the trial court did not in its decision, findings, or judgment address or rule on this *706question. Although it might be assumed that the trial judge’s failure to address this question means that he intended to deny punitive damages, I still think that the appellants are entitled to a yea or nay on this question and would remand for this purpose.
I oppose the majority’s granting of respondents’ cross-appeal. I find more than ample evidence to support the findings, conclusions, and judgment of the trial court.
The trial court found that Leon, whose testimony the trial court found to be “less than honest,” was guilty of fraudulent concealment and breach of fiduciary relationships in two different and independent respects: (1) in his capacity as a trustee for his sister Marjorie under the written trust agreements and (2) in his capacity as a long-time business partner, confident, joint venturer, and paid business manager of his sister Marjorie Riley. Accepting the record in the light most favorable to the Rileys, as we must, flagrant violations of both of the two different kinds of fiduciary relationships have been demonstrated.

Breach of Written Trust Agreements

First, with regard to Leon’s violation of his duty of good faith as Marjorie’s trustee under the written trust agreements, I observe that while Leon was trustee of a portion of the property, he was stealthily dealing on his own account in trying to buy an added portion of the trust corpus by talking his Uncle Earl into giving him for $1,000.00 an option to buy a one-half interest in the property at what can be described as a bargain-basement price.
At Leon’s urging (the word “needling” is used in the record), Marjorie’s and Leon’s Uncle Earl apparently agreed in December, 1966, to give Leon an option to purchase an undivided one-half interest in the property owned by Earl’s trust. The option entitled Leon to buy the property for $300,000.00, payable at $2,500.00 per month. At the time he got the option Leon was aware that the property was then bringing in income of almost $5,000.00 per month. Leon told his beneficiary, his sister Marjorie, nothing about his dealings with their uncle.
As stated in the majority opinion, Earl tried to cancel the arrangement in 1972 and filed suit charging that Leon had obtained the option by fraud. This litigation was dismissed in 1977. Whether Leon defrauded his uncle or not (the purchase price is considerably less than the value of the property at the time of the option), it is hard to deny that there is evidence of his having defrauded his sister, for, as the trial court found, Leon “worked systematically and secretly to gain control of The Property and obtain an interest therein greater than Marge’s.” There is no question in my mind concerning Leon’s bad faith dealing with his sister. He lied to her; he lied to the court. Both Leon and his *707wife testified that Leon had disclosed, as he should have, the existence of the option. They claimed that Leon had told Marjorie orally and in writing about the option in 1970. This was strongly denied by Marjorie, who testified that Leon had concealed the existence of the option for over thirteen years and that Marjorie had no knowledge of the option transaction until after Earl’s death in 1980. The trial court rejected the testimony of Leon and his wife, believed Marjorie, and expressly found that Leon was guilty of a “deliberate, wilful, active and fraudulent concealment” of his secret acquisition of the option from the uncle.
The majority maintains that this stealthful and concealed acquisition of an additional share of the trust corpus by Leon was perfectly legitimate because he was already a co-owner with the trusts. I do not see how this makes any difference at all, and I agree with the statement of Bogert, quoted in the majority, that where a beneficiary holds a fractional interest in property, it is a breach of duty for him to buy for himself (without informing his beneficiaries) another fractional interest in the same property. I also agree with Bogert that such transactions ought to be discouraged even if they are not such obvious breaches of duties as the purchase of some other kinds of competing interests.
The only qualification on the principle stated in Bogert’s comment arises in cases in which the trust lacks funds to purchase the interest. Such is not the case here.
Again, I agree with Bogert that if the trustee deals with himself as co-owner with the trust, he “automatically” gives room for possible conflict and dispute; and, I agree with the trial court when it found that while in a position of trust, “Leon personally competed with and profited from and enhanced his own interests to the detriment and at the expense of the interests of the plaintiffs [appellants] and the trusts.”
Because of what appears to me to be an obvious fraud and violation of the written trust agreements by Leon, I agree with the trial judge’s findings, conclusions, decision and judgment on this point.

Brother as Partner, Confident and Paid Business Manager of Sister

I believe an even stronger case is made for the propriety of the trial judge’s conclusion that there was a breach of trust in Leon’s activities when it comes to Leon’s role as a trusted partner and paid business manager and consultant of Marjorie’s.
The trial court was certainly justified in finding, as it did, that Leon was, from the early 1960’s, the manager of The Property and all other related Rockwell property in Las Vegas and that his authority extended to negotiating sales and purchases of property for the trust. The trial court was also justified in finding that *708because Marjorie had not lived in Las Vegas for many years, she relied solely upon Leon to provide her with business information concerning the property and “possibilities and/or potential for its expansion and increased profitability.”
The trial court also legitimately found that in all matters relating to the Rockwell interests in Las Vegas, Leon had expressly promised to treat his sister fairly, unselfishly, honestly, and that he would “place her interest foremost.” In telephone calls and correspondence with Marjorie, Leon frequently referred to his sister and himself as “partners,” Leon and Marjorie. For his services as a manager of the partnership Leon charged his sister at the same rate he would have been compensated had he been employed in his profession as a dentist.
The majority says that the property in question was never involved in the partnership relationship. It is true that The Property was never a partnership asset as such, but this certainly does not mean that it could not have been within the expectation of partner Marjorie that her brother, pledged to treat her “fairly,” “honestly,” “unselfishly,” and to “place her interest foremost,” would go behind her back and secretly buy Uncle Earl’s interest in the trust corpus.
I would agree with the majority that when two people are in a business relationship, all transactions of either party must not necessarily be for the benefit of the partnership. This is not the point here. The point here is that the district judge had the opportunity to view first hand the relationship and expectations of the parties. He did not think that Leon was “honest” in his testimony, and he had sound reasons for concluding that Leon, in secretly purchasing trust property on his own account, was violating his fiduciary duty as a partner, and as a paid business and financial advisor to his sister, who invested her complete belief and trust in her brother.
Reading this record I tend to be convinced that had the trial judge found that Leon had not been guilty of fraud and breach of trust that such a conclusion should have to be set aside. In light of the nature of the well-supported findings of fact in this case I cannot understand how the majority can conclude, as a matter of law, that the trial court erred in finding no actionable breach of trust in this case.
I would affirm the trial court in the manner stated at the commencement of this dissenting opinion.