Court Opinion

ID: 9791551
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:13:35.202518+00
Date Added: 2024-06-11T07:37:36.865747
License: Public Domain

Thompson, C. J.,
dissenting in part:
On August 25, 1967, a convective storm occurred causing a flash flood of water, mud and debris to overflow the channel of Second Creek and totally destroy the summer home of Gen-naro and Merle Filice at Incline Village, Lake Tahoe, Nevada. They commenced this action to recover compensatory and punitive damages for their loss.
Among others, they named as defendants Village Development Co. and G. R. Campbell.1 Village Development planned and developed the subdivision within which the Filice home was constructed. G. R. Campbell was the sales representative of Village Development who sold the subdivided lots to Mr. and Mrs. Filice. As to each, the plaintiffs asserted alternate theories for recovery; fraudulent misrepresentation, negligence and strict liability. Before trial, the district court granted summary judgment to Campbell on all theories of liability asserted against him, and also granted summary judgment for Village Development as to the strict liability count.
The case proceeded to jury trial against Village Development on two theories, fraudulent misrepresentation and negligence. The jury returned a general verdict for the plaintiffs awarding compensatory damages of $99,157.41 and punitive damages in the amount of $50,000.
The Filices have appealed from the summary judgment absolving Campbell of liability and, as well, from the summary judgment precluding trial upon its theory of strict liability *317against Village Development. Village Development has appealed from the judgment entered upon jury verdict. The two appeals were consolidated for argument and decision.
1. Appeal No. 6759: Village Development v. Filice.
(A). One of the several assignments of error concerns the basic insruction given to the jury on the negligence theory of liability together with the refusal of the court to instruct on that subject in the manner proposed by Village Development. It is Nevada law that substantial error in the charge of the court as to one of the alternative theories of liability requires remand for another trial if the jury returned a general verdict thus rendering it impossible to determine the basis for the jury result. Lightenburger v. Gordon, 81 Nev. 553, 579, 407 P.2d 728 (1965); Otterbeck v. Lamb, 85 Nev. 456, 463, 456 P.2d 855 (1969).
In capsule form, the facts relevant to negligence are these. In 1963, the Filices looked for property to buy in the Lake Tahoe Basin. They desired a home set back from the street with tree cover and a creek. They contacted Campbell, a sales representative of Village Development, who showed them two lots in Ponderosa Subdivision No. 4 at Incline Village. That subdivision had been designed, planned and developed by Village Development. The lots pleased the Filices since Second Creek coursed through them and there was adequate tree cover.
Before deciding to purchase, they inquired of Campbell as to whether the creek would pose a problem with regard to “rising and falling,” and were told by Campbell that “he had lived there for some years and that he had talked with other people and that the creek never varied more than a few inches, season by season, and year by year.” They purchased the lots, one from Village Development directly, and the other from a third person, and hired an architect to prepare plans and specifications for a home on the low portion of the property near Second Creek. Those plans were submitted to the Architectural Control Committee of the subdivider for its approval, and were approved. Arthur Wood, one of the three members of the Committee wished to have the home built on the higher part of the property in order that it would be more readily visible, and thus aid in selling other lots. His desire, however, was not transmitted to the Filices.
Raymond Smith, who was employed by Village Development to lay out the subdivision, acknowledged the potentiality of some inundation of Second Creek even though there had been no history of its ever having flooded.
*318The Filices then employed a contractor to build their home. They used the home for about two years and then listed it for sale. Before a sale was made the home was demolished by the August 1967 flood.
The convective storm commenced above the elevation where development activity had taken place. There was no recorded history of a similar occurrence on Second Creek. However, after the flood, expert witness hypothesized statistical information from which the jury arguably could infer that representatives of the subdivider should have known that the proposed location of the Filice home was within the flood plain of Second Creek. Moreover, there was substantial evidence to indicate that had their home been built on the elevated portion of their property it would have escaped damage.
These circumstances called for an instruction regarding the liability of a vendor of land who has parted with title, possession and control to his vendee, with regard to any concealed conditions known to the vendor which involve an unreasonable danger, and which he may anticipate that the vendee may not discover. Kimberlin v. Lear, 88 Nev. 492, 495, 500 P.2d 1022 (1972). Village Development offered such an instruction couched in language borrowed from Rest., Torts, 2d ed., §§ 351, 353.2 That instruction was refused. In lieu thereof the court gave a products liability instruction [BAJI 9.20; Rest., Torts, 2d ed., § 388] apparently on the assumption that one *319who develops and sells subdivided land stands in the same position as the manufacturer and seller of chattels. That instruction was reworded to make needed substitutions.
The law does not treat the vendor of land in the same manner as a seller of chattels.3 Their duties and liabilities are not precisely the same. This error may not be cast aside as harmless since it bears directly upon duty and liability. Murdock v. Petersen, 74 Nev. 363, 332 P.2d 649 (1958).
(B). The possible liability of Village Development based upon fraudulent misrepresentation also was presented to the jury. As to this claim for relief it is asserted, among other things, that the evidence offered simply was too slim to allow any recovery.
*320Clear and convincing proof must support a claim of fraud. Miller v. Lewis, 80 Nev. 402, 395 P.2d 386 (1964); Tallman v. First Nat. Bank, 66 Nev. 248, 208 P.2d 302 (1949); Gruber v. Baker, 20 Nev. 453, 23 P. 858 (1890). And, as we stated in Clark Sanitation v. Sun Valley Disposal, 87 Nev. 338, 341, 487 P.2d 337 (1971), “although this is primarily a trial court standard, its view of the matter is not necessarily conclusive since, upon review, we must consider the sufficiency of the evidence in the light of that standard, and where there exists no more than a paucity of evidence to support the charge of fraud, we will not hesitate to reverse. Nevada Mining & Exp. Co. v. Rae, 47 Nev. 182, 223 P. 825 (1924).”
The quoted language suits this case. The charge of fraud rested mainly upon two items of evidence. First, the statement of Campbell, as the sales representative of Village Development, that Second Creek did not vary more than a few inches year to year. Second, the concealment by Village Development of a material fact about which, inferentially, it should have had knowledge, namely, that the proposed location of the Filice home was within the flood plain of Second Creek.
There is no suggestion that Campbell’s statement did not reflect his honest belief. Neither did representatives of Village Development know of prior floods of Second Creek. The evidence is otherwise. Cf. Villalon v. Bowen, 70 Nev. 456, 273 P.2d 409 (1954), where the failure to disclose the material fact of a known marriage was held to be fraudulent concealment. There was no history of similar floods on Second Creek. Whether the subdivider should have known and, therefore, foreseen the possibility of a convective storm and flood which would damage homes along Second Creek is a question bearing upon the issue of negligence. It does not give a basis for fraud.
(C). The jury assessed punitive damages of $50,000. This award is challenged as unlawful. NRS 42.010 allows punitive damages “in an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud or malice, express or implied.” For reasons already expressed, I perceive no oppression or fraud in this case. The term “malice” as used in the statute means malice in fact and denotes ill will on the part of the defendant, or his desire to do harm for the mere satisfaction of doing it. Nevada Credit Rating Bur. v. Williams, 88 Nev. 601, 610, 503 P.2d 9 (1972). It contemplates willful and intentional conduct done in reckless disregard of possible results. Nevada Cement Company v. Lemler, 89 Nev. 447, 514 P.2d 1180 (1973).
An award of punitive damages was approved in the Nevada *321Credit Rating case because the attachment of property there involved was far in excess of the debt and was made with the intent of pressuring payment. And, in the Lemler case, the defendant knew that if it continued to spew dust from its cement kiln that damage would ensue, but did so notwithstanding such knowledge. In each instance there existed a reasonable basis for the contention that the defendant’s conduct was carried out in reckless disregard of the rights of the plaintiff.
Evidence of that kind is absent from the record before us. As a matter of law, punitive damages are not recoverable. To this extent, I agree with the majority opinion.
I would set aside the judgment upon jury verdict against Village Development and remand the case for a new trial on the issue of negligence alone.
2. Appeal No. 6596. Filice v. Village Development and Campbell.
In view of the majority opinion with regard to Appeal No. 6759, it is not useful to express my thoughts as to this appeal.

Willage Development succeeded to the interest of Crystal Bay Development with whom the plaintiffs dealt. For simplicity, I shall refer throughout only to Village Development.

Sec. 351: “A vendor of land is not subject to liability for physical harm caused to his vendee or others while upon the land by any dangerous condition, whether natural or artificial, which comes into existence after the vendee has taken possession.”
Sec. 353: “(1) A vendor of land who conceals or fails to disclose to his vendee any condition, whether natural or artificial, which involves unreasonable risk to persons on the land, is subject to liability to the vendee and others upon the land with the consent of the vendee or his subvendee for physical harm caused by the condition after the vendee has taken possession, if
(a) the vendee does not know or have reason to know of the condition or the risk involved, and
(b) the vendor knows or has reason to know of the condition, and realizes or should realize the risk- involved, and has reason to believe that the vendee will not discover the condition or realize the risk.
“(2) If the vendor actively conceals the condition, the liability stated in Subsection (1) continues until the vendee discovers it and has reasonable opportunity to take effective precautions against it. Otherwise the liability continues only until the vendee has had reasonable opportunity to discover the condition and to take such precautions.”

Prosser, Torts, 4th ed., at 412-413:
“The vendor of real property who parts with title, possession and control of it ceases to be either an owner or an occupier. Ordinarily, therefore, he is permitted to step out of the picture and shift all responsibility for the condition of the land to the purchaser. As to sales of land the ancient doctrine of caveat emptor lingered on, and is still very largely in force; and it is only in recent years, and then to a very limited extent that the implied warranties which have grown up around the sale of chattels have been parallelled as to land. This was perhaps for the reason that great importance is attached to the deed of conveyance, which is taken to represent the full agreement of the parties, and to exclude all other terms; the lack of any standard marketable quality, or even standard use, of land; and the fact that the vendee normally inspects the property before purchase, and so is assumed to have accepted it as it is. Thus in the absence of express agreement or misrepresentation the purchaser is expected to make his own examination and draw his own conclusions as to the condition of the land; and the vendor is, in general, not liable for any harm resulting to him from any defects existing at the time of transfer. Still less is he liable to other persons who may come upon the land.
“With the passage of time, an increased regard for human safety, and a sadly needed improvement in bargaining business ethics, have led to the development of two exceptions to this once universal rule. One of them, which finds support in the cases of lessors, and in the Restatement of Torts, is that the vendor is at least under a duty to disclose to the vendee any concealed conditions known to him which involve an unreasonable danger to the health, or safety of those upon the premises, and which he may anticipate that the vendee will not discover. If he fails to make such disclosure, he becomes liable for injury resulting from such conditions to the vendee, or to members of his family, or others upon the land in the right of the vendee. The older view was to the contrary, and there are still courts whose latest decisions deny even this obligation; but the duty should certainly exist, if only because of the analogy to the “something like fraud” in permitting even a licensee to enter in the face of a concealed and undisclosed hazard, and because the risk to the vendee is clearly great in proportion to the relatively slight burden of disclosure cast upon the vendor.
“The recognition of this duty of disclosure has thus far ended the progress of any negligence liability of the vendor.”