Court Opinion

ID: 2735506
Source: CourtListenerOpinion
Date Created: 2014-09-22 07:04:32.054575+00
Date Added: 2024-06-11T13:26:50.141151
License: Public Domain

130 Nev., Advance Opinion 71
                           IN THE SUPREME COURT OF THE STATE OF NEVADA

                    FRANCHISE TAX BOARD OF THE                          No. 53264
                    STATE OF CALIFORNIA,
                    Appellant/Cross-Respondent,
                    vs.                                                       FILED
                    GILBERT P. HYATT,
                    Respondent/Cross-Appellant.                               SEP 1 8 2014
                                                                                  s47, F..: Li   , EM N
                                                                          Ctl i'es
                                                                         BY   —

                                                                              Ii!LF &EP

                               Appeal and cross-appeal from a district court juenient on a
                    jury verdict in a tort action and from a post-judgment order awarding
                    costs. Eighth Judicial District Court, Clark County; Jessie Elizabeth
                    Walsh, Judge.
                               Affirmed in part, reversed in part, and remanded.

                    Lemons, Grundy & Eisenberg and Robert L. Eisenberg, Reno; McDonald
                    Carano Wilson LLP and Pat Lundvall, Carla Higginbotham, and Megan L.
                    Stanch, Reno,
                    for Appellant/Cross-Respondent.

                    Kaempfer Crowell Renshaw Gronauer & Fiorentino and Peter C.
                    Bernhard, Las Vegas; Hutchison & Steffen, LLC, and Mark A. Hutchison
                    and Michael K. Wall, Las Vegas; Lewis Roca Rothgerber LLP and Daniel
                    F. Polsenberg, Las Vegas; Perkins Coie LLP and Donald J. Kula, Los
                    Angeles, California,
                    for Respondent/Cross-Appellant.

                    Catherine Cortez Masto, Attorney General, and C. Wayne Howle, Solicitor
                    General, Carson City,
                    for Amicus Curiae State of Nevada.

                    Dustin McDaniel, Attorney General, Little Rock, Arkansas,
                    for Amicus Curiae State of Arkansas.

SUPREME COURT
        OF
     NEVADA

(0) 1947A    461n
                John V. Suthers, Attorney General, Denver, Colorado,
                for Amicus Curiae State of Colorado.

                Joseph R. "Beau" Biden III, Attorney General, and Richard S. Gebelein,
                Chief Deputy Attorney General, Wilmington, Delaware,
                for Amicus Curiae State of Delaware.

                Bill McCollum, Attorney General, Tallahassee, Florida,
                for Amicus Curiae State of Florida.

                Lawrence G. Wasden, Attorney General, Boise, Idaho,
                for Amicus Curiae State of Idaho.

                Shone T. Pierre, Baton Rouge, Louisiana,
                for Amicus Curiae Louisiana Secretary and the Louisiana Department of
                Revenue.

                Janet T. Mills, Attorney General, Augusta, Maine,
                for Amicus Curiae State of Maine.

                Douglas F. Gansler, Attorney General, Baltimore, Maryland,
                for Amicus Curiae State of Maryland.

                Chris Koster, Attorney General, Jefferson City, Missouri,
                for Amicus Curiae State of Missouri.

                Anne Milgram, Attorney General, Trenton, New Jersey,
                for Amicus Curiae State of New Jersey.

                Donnita A. Wald, General Counsel, Bismarck, North Dakota,
                for Amicus Curiae North Dakota State Tax Commissioner Cory Fong.

                Richard Cordray, Attorney General, Columbus, Ohio,
                for Amicus Curiae State of Ohio.

                W.A. Drew Edmondson, Attorney General, Oklahoma City, Oklahoma,
                for Amicus Curiae State of Oklahoma.

                Robert E. Cooper, Jr., Attorney General and Reporter, Nashville,
                Tennessee,
                for Amicus Curiae State of Tennessee.
SUPREME COURT
        OF
     NEVADA
                                                     2
(0) 1947A
                    John Swallow, Attorney General, and Clark L. Snelson, Assistant
                    Attorney General, Salt Lake City, Utah,
                    for Amicus Curiae State of Utah.

                    William H. Sorrell, Attorney General, Montpelier, Vermont,
                    for Amicus Curiae State of Vermont.

                    William C. Mims, Attorney General, Richmond, Virginia,
                    for Amicus Curiae State of Virginia.

                    Robert M. McKenna, Attorney General, Olympia, Washington,
                    for Amicus Curiae State of Washington.

                    Shirley Sicilian, General Counsel, Washington, District of Columbia,
                    for Amicus Curiae Multistate Tax Commission.

                    BEFORE THE COURT EN BANC.'

                                                     OPINION

                    By the Court, HARDESTY, J.:
                                In 1998, inventor Gilbert P. Hyatt sued the Franchise Tax
                    Board of the State of California (FTB) seeking damages for intentional
                    torts and bad-faith conduct committed by FTB auditors during tax audits
                    of Hyatt's 1991 and 1992 state tax returns. After years of litigation, a jury
                    awarded Hyatt $139 million in damages on his tort claims and $250
                    million in punitive damages. In this appeal, we must determine, among
                    other issues, whether we should revisit our exception to government

                          'The Honorable Nancy M. Saitta, Justice, voluntarily recused
                    herself from participation in the decision of this matter.

SUPREME COURT
       OF
     NEVADA
                                                          3
(0) 1947A AtS)44)
                     immunity for intentional torts and bad-faith conduct as a result of this
                     court's adoption of the federal test for discretionary-function immunity,
                     which shields a government• entity or its employees from suit for
                     discretionary acts that involve an element of individual judgment or choice
                     and that are grounded in public policy considerations. We hold that our
                     exception to immunity for intentional torts and bad-faith conduct survives
                     our adoption of the federal discretionary-function immunity test because
                     intentional torts and bad-faith conduct are not based on public policy.
                                 Because FTB cannot invoke discretionary-function immunity
                     to protect itself from Hyatt's intentional tort and bad-faith causes of
                     action, we must determine whether Hyatt's claims for invasion of privacy,
                     breach of confidential relationship, abuse of process, fraud, and intentional
                     infliction of emotional distress survive as a matter of law, and if so,
                     whether they are supported by substantial evidence. All of Hyatt's causes
                     of action, except for his fraud and intentional infliction of emotion distress
                     claims, fail as a matter of law, and thus, the judgment in his favor on
                     these claims is reversed.
                                 As to the fraud cause of action, sufficient evidence exists to
                     support the jury's findings that FTB made false representations to Hyatt
                     regarding the audits' processes and that Hyatt relied on those
                     representations to his detriment and damages resulted. In regard to
                     Hyatt's claim for intentional infliction of emotional distress, we conclude
                     that medical records are• not mandatory in order to establish a claim for
                     intentional infliction of emotional distress if the acts of the defendant are
                     sufficiently severe. As a result, substantial evidence supports the jury's
                     findings as to liability, but evidentiary and jury instruction errors
                     committed by the district court require reversal of the damages awarded

SUPREME COURT
       OF
    NEVADA
                                                           4
10) 194A    001:).
                for emotional distress and a remand for a new trial as to the amount of
                damages on this claim only.
                             In connection with these causes of action, we must address
                whether FTB is entitled to a statutory cap on the amount of damages that
                Hyatt may recover from FTB on the fraud and intentional infliction of
                emotional distress claims under comity. We conclude that Nevada's policy
                interest in providing adequate redress to its citizens outweighs providing
                FTB a statutory cap on damages under comity, and therefore, we affirm
                the $1,085,281.56 of special damages awarded to Hyatt on his fraud cause
                of action and conclude that there is no statutory cap on the amount of
                damages that may be awarded on remand on the intentional infliction of
                emotional distress claim.
                            We also take this opportunity to address as a matter of first
                impression whether, based on comity, it is reasonable to provide FTB with
                the same protection of California law, to the extent that it does not conflict
                with Nevada law, to grant FTB immunity from punitive damages.
                Because punitive damages would not be available against a Nevada
                government entity, we hold, under comity principles, that FTB is immune
                from punitive damages. Thus, we reverse that portion of the district
                court's judgment awarding Hyatt punitive damages.
                            For the reasons discussed below, we affirm in part, reverse in
                part, and remand this case to the district court for further proceedings.
                                  FACTS AND PROCEDURAL HISTORY
                California proceedings
                            In 1993, after reading a newspaper article regarding
                respondent/cross-appellant Hyatt's lucrative computer-chip patent and the
                large sums of money that Hyatt was making from the patent, a tax auditor
                for appellant/cross-respondent FTB decided to review Hyatt's 1991 state
SUPREME COURT
         OF
      NEVADA
                                                      5
(0) 1.947A
                income tax return. The return revealed that Hyatt did not report, as
                taxable income, the money that he had earned from the patent's licensing
                payments and that he had only reported 3.5 percent of his total taxable
                income for 1991. Hyatt's tax return showed that he had lived in California
                for nine months in 1991 before relocating to Las Vegas, Nevada, but Hyatt
                claimed no moving expenses on his 1991 tax return. Based on these
                discrepancies, FTB opened an audit on Hyatt's 1991 state income tax
                return.
                            The 1991 audit began when Hyatt was sent notice that he was
                being audited This notification included an information request form that
                required Hyatt to provide certain information concerning his connections
                to California and Nevada and the facts surrounding his move to Nevada.
                A portion of the information request form contained a privacy notice,
                which stated in relevant part that "The Information Practices Act of 1977
                and the federal Privacy Act require the Franchise Tax Board to tellS you
                why we ask you for information. The Operations and Compliance
                Divisions ask for tax return information to carry out the Personal Income
                Tax Law of the State of California." Also included with the notification
                was a document containing a list of what the taxpayer could expect from
                FTB: "Courteous treatment by FTB employees[i Clear and concise
                requests for information from the auditor assigned to your caseLl
                Confidential treatment of any personal and financial information that you
                provide to us [,] Completion of the audit within a reasonable amount of
                time [.1"
                            The audit involved written communications and interviews.
                FTB sent over 100 letters and demands for information to third parties
                including banks, utility companies, newspapers (to learn if Hyatt had

SUPREME COURT
        OF
     NEVADA
                                                    6
(0) 1947A
                subscriptions), medical providers, Hyatt's attorneys, two Japanese
                companies that held licenses to Hyatt's patent (inquiring about payments
                to Hyatt), and other individuals and entities that Hyatt had identified as
                contacts. Many, but not all, of the letters and demands for information
                contained Hyatt's social security number or home address or both. FTB
                also requested information and documents directly from Hyatt.
                Interviews were conducted and signed statements were obtained from
                three of Hyatt's relatives—his ex-wife, his brother, and his daughter—all
                of whom were estranged from Hyatt during the relevant period in
                question, except for a short time when Hyatt and his daughter attempted
                to reconcile their relationship. No relatives with whom Hyatt had good
                relations, including his son, were ever interviewed even though Hyatt had
                identified them as contacts. FTB sent auditors to Hyatt's neighborhood in
                California and to various locations in Las Vegas in search of information.
                             Upon completion of the 1991 audit, FTB concluded that Hyatt
                did not move from California to Las Vegas in September 1991, as he had
                stated, but rather, that Hyatt had moved in April 1992. FTB further
                concluded that Hyatt had staged the earlier move to Nevada by renting an
                apartment, obtaining a driver's license, insurance, bank account, and
                registering to vote, all in an effort to avoid state income tax liability on his
                patent licensing. FTB further determined that the sale of Hyatt's
                California home to his work assistant was a sham. A detailed explanation
                of what factors FTB considered in reaching its conclusions was provided,
                which in addition to the above, included comparing contacts between
                Nevada and California, banking activity in the two states, evidence of
                Hyatt's location in the two states during the relevant period, and
                professionals whom he employed in the two states. Based on these

SUPREME COURT
     OF
   NEVADA
                                                       7
(0) 1947A AMP
                     findings, FTB determined that Hyatt owed the state of California
                     approximately $1.8 million in additional state income taxes and that
                     penalties against Hyatt in the amount of $1.4 million were warranted.
                     These amounts, coupled with $1 2 million in interest, resulted in a total
                     assessment of $4.5 million.
                                  The 1991 audit's finding that Hyatt did not move to Las Vegas
                     until April 1992 prompted FTB to commence a second audit of Hyatt's
                     1992 California state taxes. Because he maintained that he lived in
                     Nevada that tax year, Hyatt did not file a California tax return for 1992,
                     and he opposed the audit. Relying in large part on the 1991 audit's
                     findings and a single request for information sent to Hyatt regarding
                     patent-licensing payments received in 1992, FTB found that Hyatt owed
                     the state of California over $6 million in taxes and interest for 1992.
                     Moreover, penalties similar to those imposed by the 1991 audit were later
                     assessed.
                                  Hyatt formally challenged the audits' conclusions by filing two
                     protests with FTB that were handled concurrently. Under a protest, an
                     audit is reviewed by FTB for accuracy, or the need for any changes, or
                     both. The protests lasted over 11 years and involved 3 different FTB
                     auditors. In the end, FTB upheld the audits, and Hyatt went on to
                     challenge them in the California courts. 2
                     Nevada litigation
                                  During the protests, Hyatt filed the underlying Nevada
                     lawsuit in January 1998. His complaint included a claim for declaratory

                           2 Atthe time of this appeal, Hyatt was still challenging the audits'
                     conclusions in California courts.

SUPREME COURT
       OF
     NEVADA
                                                           8
(0) 1947A 919/P199
                   relief concerning the timing of his move from California to Nevada and a
                   claim for negligence. The complaint also identified seven intentional tort
                   causes of action allegedly committed by FTB during the 1991 and 1992
                   audits: invasion of privacy—intrusion upon seclusion, invasion of
                   privacy—publicity of private facts, invasion of privacy—false light,
                   intentional infliction of emotional distress, fraud, breach of confidential
                   relationship, and abuse of process. Hyatt's lawsuit was grounded on his
                   allegations that FTB conducted unfair audits that amounted to FTB
                   "seeking to trump up a tax claim against him or attempt Ling] to extort
                   him," that FTB's audits were "goal-oriented," that the audits were
                   conducted to improve FTB's tax assessment numbers, and that the
                   penalties FTB imposed against Hyatt were intended "to better bargain for
                   and position the case to settle."
                                  Early in the litigation, FTB filed a motion for partial summary
                   judgment challenging the Nevada district court's jurisdiction over Hyatt's
                   declaratory relief cause of action. The district court agreed on the basis
                   that the timing of Hyatt's move from California to Nevada and whether
                   FTB properly assessed taxes and penalties against Hyatt should be
                   resolved in the ongoing California administrative process. Accordingly,
                   the district court granted FTB partial summary judgment. 3 As a result of
                   the district court's ruling, the parties were required to litigate the action
                   under the restraint that any determinations as to the audits' accuracy
                   were not part of Hyatt's tort action and the jury would not make any

                         3 That ruling was not challenged in this court, and consequently, it is
                   not part of this appeal.

SUPREME COURT
        OF
     NEVADA
                                                          9
(0) 1947A    er,
                 findings as to when Hyatt moved to Nevada or whether the audits'
                 conclusions were correct.
                             FTB also moved the district court for partial summary
                 judgment to preclude Hyatt from seeking recovery for alleged economic
                 damages. As part of its audit investigation, FTB sent letters to two
                 Japanese companies that had licensing agreements with Hyatt requesting
                 payment information between Hyatt and the companies. Included with
                 the letters were copies of the licensing agreements between Hyatt and the
                 Japanese companies. Hyatt asserted that those documents were
                 confidential and that when FTB sent the documents to the companies, the
                 companies were made aware that Hyatt was under investigation. Based
                 on this disclosure, Hyatt theorized that the companies would have then
                 notified the Japanese government, who would in turn notify other
                 Japanese businesses that Hyatt was under investigation. Hyatt claimed
                 that this ultimately ended Hyatt's patent-licensing business in Japan.
                 Hyatt's evidence in support of these allegations included the fact that FTB
                 sent the letters, that the two businesses sent responses, that Hyatt had no
                 patent-licensing income after this occurred, and expert testimony that this
                 chain of events would likely have occurred in the Japanese business
                 culture. FTB argued that Hyatt's evidence was speculative and
                 insufficient to adequately support his claim. Hyatt argued that he had
                 sufficient circumstantial evidence to present the issue to the jury. The
                 district court granted FTB's motion for partial summary judgment,
                 concluding that Hyatt had offered no admissible evidence to support that
                 the theorized chain of events actually occurred and, as a result, his
                 evidence was too speculative to overcome the summary judgment motion.

SUPREME COURT
        OF
     NEVADA
                                                      10
(0) 1947A    e
                             One other relevant proceedingS that bears discussion in this
                 appeal concerns two original writ petitions filed by FTB in this court in
                 2000. In those petitions, FTB sought immunity from the entire underlying
                 Nevada lawsuit, arguing that it was entitled to the complete immunity
                 that it enjoyed under California law based on either sovereign immunity,
                 the Full Faith and Credit Clause, or comity. This court resolved the
                 petitions together in an unpublished order in which we concluded that
                 FTB was not entitled to full immunity under any of these principles. But
                 we did determine that, under comity, FTB should be granted partial
                 immunity equal to the immunity a Nevada government agency would
                 receive. In light of that ruling, this court held that FTB was immune from
                 Hyatt's negligence cause of action, but not from his intentional tort causes
                 of action. The court concluded that while Nevada provided immunity for
                 discretionary decisions made by government agencies, such immunity did
                 not apply to intentional torts or bad-faith conduct because to allow it to do
                 so would "contravene Nevada's policies and interests in this case."
                             This court's ruling in the writ petitions was appealed to and
                 upheld by the United States Supreme Court. Franchise Tax Bd. of Cal. v.
                 Hyatt, 538 U.S. 488 (2003). In Hyatt, the Supreme Court focused on the
                 issue of whether the Full Faith and Credit Clause of the federal
                 constitution required Nevada to afford FTB the benefit of the full
                 immunity that California provides FTB.       Id. at 494. The Court upheld
                 this court's determination that Nevada was not required to give FTB full
                 immunity    Id. at 499. The Court further upheld this court's conclusion
                 that FTB was entitled to partial immunity under comity principles,
                 observing that this court "sensitively applied principles of comity with a
                 healthy regard for California's sovereign status, relying on the contours of

SUPREME COURT
        OF
     NEVADA
                                                      11
(0) 1947A    e
                  Nevada's own sovereign immunity from suit as a benchmark for its
                  analysis." Id. The Supreme Court's ruling affirmed this court's limitation
                  of Hyatt's case against FTB to the intentional tort causes of action.
                                 Ultimately, Hyatt's case went to trial before a jury. The trial
                  lasted approximately four months. The jury found in favor of Hyatt on all
                  intentional tort causes of action and returned special verdicts awarding
                  him damages in the amount of $85 million for emotional distress, $52
                  million for invasion of privacy, $1,085,281.56 as special damages for fraud,
                  and $250 million in punitive damages. Following the trial, Hyatt sought
                  prejudgment interest and moved the district court for costs. The district
                  court assigned the motion to a special master who, after 15 months of
                  discovery and further motion practice, issued a recommendation that
                  Hyatt be awarded approximately $2.5 million in costs. The district court
                  adopted the master's recommendation.
                                 FTB appeals from the district court's final judgment and the
                  post-judgment award of costs. Hyatt cross-appeals, challenging the
                  district court's partial summary judgment ruling that he could not seek, as
                  part of his damages at trial, economic damages for the alleged destruction
                  of his patent-licensing business in Japan. 4
                                                   DISCUSSION
                                 We begin by addressing FTB's appeal, which raises numerous
                  issues that it argues entitle it to either judgment as a matter of law in its

                        4 This
                             court granted permission for the Multistate Tax Commission
                  and the state of Utah, which was joined by other states (Arkansas,
                  Colorado, Delaware, Florida, Idaho, Louisiana, Maine, Maryland,
                  Missouri, New Jersey, North Dakota, Ohio, Oklahoma, Tennessee,
                  Vermont, Virginia, and Washington) to file amicus curiae briefs.

SUPREME COURT
        OF
     NEVADA
                                                         12
(0) 1947A    eD
                     favor or remand for a new trial. As a threshold matter, we address
                     discretionary-function immunity and whether Hyatt's causes of action
                     against FTB are barred by this immunity, or whether there is an
                     exception to the immunity for intentional torts and bad-faith conduct.
                     Deciding that FTB is not immune from suit, we then consider FTB's
                     arguments as to each of Hyatt's intentional tort causes of action. We
                     conclude our consideration of FTB's appeal by discussing Nevada's
                     statutory caps on damages and immunity from punitive damages. As for
                     Hyatt's cross-appeal, we close this opinion by considering his challenge to
                     the district court's partial summary judgment in FTB's favor on Hyatt's
                     damages claim for economic loss.
                     FTB is not immune from suit under comity because discretionary-function
                     immunity in Nevada does not protect Nevada's government or its employees
                     from intentional torts and bad-faith conduct
                                 Like most states, Nevada has waived traditional sovereign
                     immunity from tort liability, with some exceptions. NRS 41.031. The
                     relevant exception at issue in this appeal is discretionary-function
                     immunity, which provides that no action can be brought against the state
                     or its employee 'based upon the exercise or performance or the failure to
                     exercise or perform a discretionary function or duty on the part of the
                     State .. . or of any.... employee ... , whether or not the discretion
                     involved is abused." NRS 41.032(2). By adopting discretionary-function
                     immunity, our Legislature has placed a limit on its waiver of sovereign
                     immunity. Discretionary-function immunity is grounded in separation of
                     powers concerns and is designed to preclude the judicial branch from
                     "second-guessing," in a tort action, legislative and executive branch
                     decisions that are based on "social, economic, and political policy."
                     Martinez v. Maruszczak, 123 Nev. 433, 446, 168 P.3d 720, 729 (2007)

SUPREME COURT
        OF
     NEVADA
                                                         13
(0) (94Th    4K(IL
                   (internal quotations omitted); see also Bailey v. United States, 623 F.3d
855, 860 (9th Cir. 2010). FTB initially argues on appeal that immunity
                   protects it from Hyatt's intentional tort causes of action based on the
                   application of discretionary-function immunity and comity as recognized
                   in Nevada.
                                Comity is a legal principle whereby a forum state may give
                   effect to the laws and judicial decisions of another state based in part on
                   deference and respect for the other state, but only so long as the other
                   state's laws are not contrary to the policies of the forum state.   Mianecki v.
                   Second Judicial Dist. Court, 99 Nev. 93, 98, 658 P.2d 422, 424-25 (1983);
                   see also Solomon v. Supreme Court of Fla., 816 A.2d 788, 790 (D.C. 2002);
                   Schoeberlein v. Purdue Univ., 544 N.E.2d 283, 285 (Ill 1989); McDonnell
                   v. III., 748 A.2d 1105, 1107 (N.J. 2000); Sam v. Estate of Sam, 134 P.3d
761, 764-66 (N.M. 2006); Hansen v. Scott, 687 N.W.2d 247, 250, 250 (N.D.
                   2004). The purpose behind comity is to "foster cooperation, promote
                   harmony, and build good will" between states. Hansen, 687 N.W.2d at 250
                   (internal quotations omitted). But whether to invoke comity is within the
                   forum state's discretion. Mianecki, 99 Nev. at 98, 658 P.2d at 425. Thus,
                   when a lawsuit is filed against another state in Nevada, while Nevada is
                   not required to extend immunity in its courts to the other state, Nevada
                   will consider extending immunity under comity, so long as doing so does
                   not violate Nevada's public policies.      Id. at 98, 658 P.2d at 424-25. In
                   California, FTB enjoys full immunity from tort actions arising in the
                   context of an audit. Cal. Gov't Code § 860.2 (West 2012). FTB contends
                   that it should receive the immunity protection provided by California
                   statutes to the extent that such immunity does not violate Nevada's public
                   policies under comity.

SUPREME COURT
        OF
     NEVADA
                                                         14
(0) 1947A    el,
                Discretionary-function immunity in Nevada
                            This court's treatment of discretionary-function immunity has
                changed over time. In the past, we applied different tests to determine
                whether to grant a government entity or its employee discretionary-
                function immunity See, e.g., Arnesano v. State ex rel. Dep't of Transp., 113
Nev. 815, 823-24, 942 P.2d 139, 144-45 (1997) (applying planning-versus-
                operational test to government action), abrogated by Martinez, 123 Nev. at
                443-44, 168 P.3d at 726-27; State v. Silva, 86 Nev. 911, 913-14, 478 P.2d
591, 592-93 (1970) (applying discretionary-versus-ministerial test to
                government conduct), abrogated by Martinez, 123 Nev. at 443-44, 168 P.3d
                at 726-27. We also recognized an exception to discretionary-function
                immunity for intentional torts and bad-faith conduct.     Falline v. GNLV
                Corp., 107 Nev. 1004, 1009 & n.3, 823 P.2d 888, 892 & n.3 (1991)
                (plurality opinion). More recently, we adopted the federal two-part test for
                determining the applicability of discretionary-function immunity.
                Martinez, 123 Nev. at 444-47, 168 P.3d at 727-29 (adopting test named
                after two United States Supreme Court decisions: Berkovitz v. United
                States, 486 U.S. 531 (1988), and United States v. Gaubert, 499 U.S. 315
                (1991)). Under the Berkovitz-Gaubert two-part test, discretionary-function
                immunity will apply if the government actions at issue "(1) involve an
                element of individual judgment or choice and (2) [are] based on
                considerations of social, economic, or political policy." Martinez, 123 Nev.
                at 446-47, 168 P.3d at 729. When this court adopted the federal test in
                Martinez, we expressly dispensed with the earlier tests used by this court
                to determine whether to grant a government entity or its employee
                immunity, id. at 444, 168 P.3d at 727, but we did not address the Falline
                exception to immunity for intentional torts or bad-faith misconduct.

SUPREME COURT
        OF
     NEVADA
                                                     15
(0) 1947A
                             In the earlier writ petitions filed by FTB in this court, we
                relied on Falline to determine that FTB was entitled to immunity from
                Hyatt's negligence cause of action, but not the remaining intentional-tort-
                based causes of action. Because the law concerning the application of
                discretionary-function immunity has changed in Nevada since FTB's writ
                petitions were resolved, we revisit the application of discretionary-function
                immunity to FTB in the present case as it relates to Hyatt's intentional
                tort causes of action. Hsu v. Cnty. of Clark, 123 Nev. 625, 632, 173 P.3d
724, 730 (2007) (stating that "the doctrine of the law of the case should not
                apply where, in the interval between two appeals of a case, there has been
                a change in the law by. . . a judicial ruling entitled to deference" (internal
                quotations omitted)).
                             FTB contends that when this court adopted the federal test in
                Martinez, it impliedly overruled the Falline exception to discretionary-
                function immunity for intentional torts and bad-faith misconduct. Hyatt
                maintains that the Martinez case did not alter the exception created in
                Falline and that discretionary immunity does not apply to bad-faith
                misconduct because an employee does not have discretion to undertake
                intentional torts or act in bad faith.
                             In Falline, 107 Nev. at 1009, 823 P.2d at 891-92, this court
                ruled that the discretionary-function immunity under NRS 41.032(2) did
                not apply to bad-faith misconduct. The case involved negligent processing
                of a workers' compensation claim. Falline injured his back at work and
                later required surgery.      Falline, 107 Nev. at 1006, 823 P.2d at 890.
                Following the surgery, while rising from a seated position, Falline
                experienced severe lower-back pain.           Id. at 1006-07, 823 P.2d at 890.
                Falline's doctor concluded that Falline's back pain was related to his work

SUPREME COURT
        OF
     NEVADA
                                                         16
(0) 1947A
                 injury. Id. at 1007, 823 P.2d at 890. The self-insured employer, however,
                 refused to provide workers' compensation benefits beyond those awarded
                 for the work injury because it asserted that an intervening injury had
                 occurred.   Id.    After exhausting his administrative remedies, it was
                 determined that Falline was entitled to workers' compensation benefits for
                 both injuries.    Id.   He was nevertheless denied benefits.    Id.   Falline
                 brought suit against the employer for negligence and bad faith in the
                 processing of his workers' compensation claims. Id. at 1006, 823 P.2d at
                 889-90. The district court dismissed his causes of action, and Falline
                 appealed, arguing that dismissal was improper.
                             On appeal, after concluding that a self-insured employer
                 should be treated the same as the State Industrial Insurance System, this
                 court concluded that Falline could maintain a lawsuit against the self-
                 insured employer based on negligent handling of his claims. Id. at 1007-
                 09, 823 P.2d at 890-92. In discussing its holding, the court addressed
                 discretionary immunity and explained that "if failure or refusal to timely
                 process or pay claims is attributable to bad faith, immunity does not apply
                 whether an act is discretionary or not." Id. at 1009, 823 P.2d at 891. The
                 court reasoned that the insurer did not have discretion to act in bad faith,
                 and therefore, discretionary-function immunity did not apply to protect
                 the insurer from suit. Id. at 1009, 823 P.2d at 891-92.
                             The Falline court expressly addressed NRS 41.032(2)'s
                 language that there is immunity "whether or not the discretion involved is
                 abused." Falline, 107 Nev. at 1009 n.3, 823 P.2d at 892 n.3. The court
                 determined that bad faith is different from an abuse of discretion, in that
                 an abuse of discretion occurs when a person acts within his or her
                 authority but the action lacks justification, while bad faith "involves an

SUPREME COUFtT
        OF
     NEVADA
                                                      17
(0) 1947A
                implemented attitude that completely transcends the circumference of
                authority granted" to the actor.   Id. Thus, the Falline court viewed the
                exception to discretionary immunity broadly.
                            Following Falline, this court adopted, in Martinez, the federal
                test for determining whether discretionary-function immunity applies.
123 Nev. at 446, 168 P.3d at 729. Under the two-part federal test, the first
                step is to determine whether the government conduct involves judgment
                or choice. Id. at 446-47, 168 P.3d at 729. If a statute, regulation, or policy
                requires the government employee to follow a specific course of action for
                which the employee has no option but to comply with the directive, and
                the employee fails to follow this directive, the discretionary-immunity
                exception does not apply to the employee's action because the employee is
                not acting with individual judgment or choice.     Gaubert, 499 U.S. at 322.
                On the other hand, if an employee is free to make discretionary decisions
                when executing the directives of a statute, regulation, or policy, the test's
                second step requires the court to examine the nature of the actions taken
                and whether they are susceptible to policy analysis. Martinez, 123 Nev. at
                445-46, 168 P.3d at 729; Gaubert, 499 U.S. at 324. "[E]ven assuming the
                challenged conduct involves an element of judgment [or choice]," the
                second step requires the court to determine "whether that judgment for
                choice] is of the kind that the discretionary function exception was
                designed to shield."   Gaubert, 499 U.S. at 322-23. If "the challenged
                actions are not the kind of conduct that can be said to be grounded in the
                policy of the regulatory regime," discretionary-function immunity will not
                bar the claim.   Id. at 324-25. The second step focuses on whether the
                conduct undertaken is a policymaking decision regardless of the

SUPREME COURT
        OF
     NEVADA
                                                      18
(0) 1947A
                employee's subjective intent when he or she acted. Martinez, 123 Nev. at
                445, 168 P.3d at 728.
                            FTB argues that the federal test abolished the           Falline
                intentional tort or bad-faith misconduct exception to discretionary-
                function immunity because the federal test is objective, not subjective.
                Hyatt asserts that an intentional or bad-faith tort will not meet the two-
                part discretionary-immunity test because such conduct cannot be
                discretionary or policy-based.
                            Other courts addressing similar questions have reached
                differing results, depending on whether the court views the restriction
                against considering subjective intent to apply broadly or is limited to
                determining if the decision is a policymaking decision. Some courts
                conclude that allegations of intentional or bad-faith misconduct are not
                relevant to determining if the immunity applies because courts should not
                consider the employee's subjective intent at all. Reynolds v. United States,
                549 F.3d 1108, 1112 (7th Cir. 2008); Franklin Say. Corp. v. United States,
                180 F.3d 1124, 1135 (10th Cir. 1999); see also Sydnes v. United States, 523
F.3d 1179, 1185 (10th Cir. 2008). But other courts focus on whether the
                employee's conduct can be viewed as a policy-based decision and hold that
                intentional torts or bad-faith misconduct are not policy-based acts.
                Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 475 (2d Cir. 2006);
                Palay v. United States, 349 F.3d 418, 431-32 (7th Cir. 2003); Coulthurst v.
                United States, 214 F.3d 106, 109 (2d Cir. 2000). 5 These courts bar the

                      5 Coulthurst
                                 is affirmatively cited by the Seventh Circuit Court of
                Appeals in Palay v. United States, 349 F.3d 418, 431-32 (7th Cir. 2003).
                Although the Seventh Circuit in Reynolds, 549 F.3d at 1112, stated the
                                                               continued on next page . . .
SUPREME COURT
     OF
   NEVADA
                                                     19
(0) 1947A -9e
                application of discretionary-function immunity in intentional tort and bad-
                faith misconduct cases when the government action involved is "unrelated
                to any plausible policy objective[ ]." Coulthurst, 214 F.3d at 111. A closer
                look at these courts' decisions is useful for our analysis.
                      Courts that decline to recognize bad-faith conduct that calls for an
                      inquiry into an employee's subjective intent
                             In Franklin Savings Corp. v. United States, 180 F.3d at 1127,
                1134-42, the Tenth Circuit Court of Appeals addressed the specific issue of
                whether a claim for bad faith precludes the application of discretionary-
                function immunity. In that case, following the determination that the
                Franklin Savings Association was not safe or sound to conduct business, a
                conservator was appointed.     Id. at 1127. Thereafter, plaintiffs Franklin
                Savings Association and its parent company filed suit against defendants
                the United States government and the conservator to have the
                conservatorship removed.      Id.   Plaintiffs alleged that the conservator
                intentionally and in bad faith liquidated the company instead of
                preserving the company and eventually returning it to plaintiffs to
                transact business. Id. at 1128.

                • . . continued
                proposition that claims of malicious and bad-faith conduct were not
                relevant in determining discretionary immunity because the courts do not
                look at subjective intent, the Palay court specifically held that
                discretionary immunity can be avoided if the actions were the result of
                laziness or carelessness because such actions are not policy-based
                decisions. Palay, 349 F.3d at 431-32. Reynolds was published after Palay,
                and while it cites to Palay for other unrelated issues, it does not address
                its holding in connection with the holding in Palay.

SUPREME COURT
        OF
     NEVADA
                                                      20
(0) 1947A
                                On appeal, the Franklin Savings court explained that
                  plaintiffs did not dispute that the conservator had the authority and
                  discretion to sell assets, but the argument was whether immunity for
                  decisions that were discretionary could be avoided because plaintiffs
                  alleged that the conduct was intentionally done to achieve an improper
                  purpose—to deplete capital and retroactively exculpate the conservator's
                  appointment. Id. at 1134. Thus, the court focused on the second part of
                  the federal test. In considering whether the alleged intentional
                  misconduct barred the application of discretionary-function immunity
                  under the federal test, the Franklin Savings court first noted that the
                  United States Supreme Court had "repeatedly insisted ... that [tort]
                  claims are not vehicles to second-guess policymaking."       Id.   The court
                  further observed that the Supreme Court's modification to Berkovitz, in
                  Gaubert, to include a query of whether the nature of the challenged
                  conduct was "susceptible to policy analysis[,] . .. served to emphasize that
                  courts should not inquire into the actual state of mind or decisionmaking
                  process of federal officials charged with performing discretionary
                  functions."    Id. at 1135 (internal quotations omitted). The Franklin
                  Savings court ultimately concluded that discretionary-function immunity
                  attaches to bar claims that "depend[ ] on an employee's bad faith or state
                  of mind in performing facially authorized acts,"       id. at 1140, and to
                  conclude otherwise would mean that the immunity could not effectively
                  function. Id. at 1140-41.
                                Notwithstanding its conclusion, the Franklin Savings court
                  noted that such a holding had "one potentially troubling effect"; it created
                  an "irrebuttable presumption" that government employees try to perform
                  all discretionary functions in good faith and that the court's holding would

SUPREME COURT
        OF
     NEVADA
                                                       21
(0) 1947A    ea
                preclude relief in cases where an official committed intentional or bad-
                faith conduct.   Id. at 1141. Such a result was necessary, the court
                reasoned, because providing immunity for employees, so that they do not
                have to live and act in constant fear of litigation in response to their
                decisions, outweighs providing relief in the few instances of intentionally
                wrongful conduct.   Id. at 1141-42. Thus, the Franklin Savings court
                broadly applied the Supreme Court rule that an actor's subjective intent
                should not be considered. This broad application led the court to conclude
                that a bad-faith claim was not sufficient to overcome discretionary-
                function immunity's application.
                     Courts that consider whether an employee subjectively intended to
                     further policy by his or her conduct
                            Other courts have come to a different conclusion. Most
                significant is Coulthurst v. United States, 214 F.3d 106, in which the
                Second Circuit Court of Appeals addressed the issue of whether the
                inspection of weightlifting equipment by prison officials was grounded in
                policy considerations. In Coulthurst, an inmate in a federal prison was
                injured while using the prison's exercise equipment.     Id. at 107. The
                inmate filed suit against the United States government, alleging
                "negligence and carelessness" and a "Tarn -Lire] to diligently and
                periodically inspect" the exercise equipment. Id. at 108. The lower court
                dismissed the complaint, reasoning that the decisions that established the
                procedures and timing for inspection involved "elements of judgment or
                choice and a balancing of policy considerations," such that discretionary-
                function immunity attached to bar liability.     Id. at 109. Coulthurst
                appealed.
                            In resolving the appeal, the Court of Appeals concluded that
                the complaint could be read to mean different types of negligent or
SUPREME COURT
       OF
    NEVADA
                                                    22
(0) 947A    e
                careless conduct. Id. The court explained that the complaint asserting
                negligence or carelessness could legitimately be read to refer to how
                frequently inspections should occur, which might fall under discretionary-
                function immunity. Id.     But the same complaint, the court noted, could
                also be read to assert negligence and carelessness in the failure to carry
                out prescribed responsibilities, such as prison officials failing to inspect
                the equipment out of laziness, haste, or inattentiveness.     Id.   Under the
                latter reading, the court stated that
                            the official assigned to inspect the machine may in
                            laziness or haste have failed to do the inspection
                            he claimed (by his initials in the log) to have
                            performed; the official may have been distracted or
                            inattentive, and thus failed to notice the frayed
                            cable; or he may have seen the frayed cable but
                            been too lazy to make the repairs or deal with the
                            paperwork involved in reporting the damage.
                Id. The court concluded that such conduct did not involve an element of
                judgment or choice nor was it based on policy considerations, and in such
                an instance, discretionary-function immunity does not attach to shield the
                government from suit. Id. at 109-11. In the end, the Coulthurst court held
                that the inmate's complaint sufficiently alleged conduct by prison officials
                that was not immunized by the discretionary-function immunity
                exception, and the court vacated the lower court's dismissal and remanded
                the case for further proceedings. Id.
                            The difference in the Franklin Savings and Coulthurst
                approaches emanates from how broadly those courts apply the statement
                in Gaubert that "[Ole focus of the inquiry is not on the agent's subjective
                intent in exercising the discretion conferred . . . , but on the nature of the
                actions taken and on whether they are susceptible to policy analysis." 499
U.S. at 325. Franklin Savings interpreted this requirement expansively to
SUPREME COURT
        OF
     NEVADA
                                                        23
(0) I947A
                 preclude any consideration of whether an actor's conduct was done
                 maliciously or in bad faith, whereas Goulthurst applied a narrower view of
                 subjective intent, concluding that a complaint alleging a nondiscretionary
                 decision that caused the injury was not grounded in public policy. Our
                 approach in Falline concerning immunity for bad-faith conduct is
                 consistent with the reasoning in Coulthurst that intentional torts and bad-
                 faith conduct are acts "unrelated to any plausible policy objective[ 1" and
                 that such acts do not involve the kind of judgment that is intended to be
                 shielded from "judicial second-guessing." 214 F.3d at 111 (internal
                 quotations omitted). We therefore affirm our holding in Falline that NRS
                 41.032 does not protect a government employee for intentional torts or
                 bad-faith misconduct, as such misconduct, "by definition, [cannot] be
                 within the actor's discretion." Falline, 107 Nev. at 1009, 823 P.2d at 891-
                 92.
                             In light of our conclusion, we must now determine whether to
                 grant, under comity principles, FTB immunity from Hyatt's claims.
                 Because we conclude that discretionary-function immunity under NRS
                 41.032 does not include intentional torts and bad-faith conduct, a Nevada
                 government agency would not receive immunity under these
                 circumstances, and thus, we do not extend such immunity to FTB under
                 comity principles, as to do so would be contrary to the policy of this state.
                 Hyatt's intentional tort causes of action
                             Given that FTB may not invoke immunity, we turn next to
                 FTB's various arguments contesting the judgment in favor of Hyatt on

SUPREME COURT
        OF
     NEVADA
                                                       24
(0) 1947A    e
                each of his causes of action.° Hyatt brought three invasion of privacy
                causes of action—intrusion upon seclusion, publicity of private facts, and
                false light—and additional causes of action for breach of confidential
                relationship, abuse of process, fraud, and intentional infliction of
                emotional distress. We discuss each of these causes of action below.
                             This court reviews questions of law de novo.      Martinez, 123
Nev. at 438, 168 P.3d at 724. A jury's verdict will be upheld if it is
                supported by substantial evidence.         Prabhu v. Levine, 112 Nev. 1538,
                1543, 930 P.2d 103, 107 (1996). Additionally, we "will not reverse an order
                or judgment unless error is affirmatively shown."      Schwartz v. Estate of
                Greenspun, 110 Nev. 1042, 1051, 881 P.2d 638, 644 (1994).
                      Invasion of privacy causes of action
                             The tort of invasion of privacy embraces four different tort
                actions: "(a) unreasonable intrusion upon the seclusion of another; or (b)
                appropriation of the other's name or likeness; or (c) unreasonable publicity
                given to the other's private life; or (d) publicity that unreasonably places
                the other in a false light before the public." Restatement (Second) of Torts
                § 652A (1977) (citations omitted); PETA v. Bobby Berosini, Ltd., 111 Nev.
615, 629, 895 P.2d 1269, 1278 (1995), overruled on other grounds by City of
                Las Vegas Downtown Redev. Agency v. Hecht,        113 Nev. 644, 650, 940 P.2d
134, 138 (1997). At issue in this appeal are the intrusion, disclosure, and
                false light aspects of the invasion of privacy tort. The jury found in

                      6 We  reject Hyatt's contention that this court previously determined
                that each of his causes of action were valid as a matter of law based on the
                facts of the case in resolving the prior writ petitions. To the contrary, this
                court limited its holding to whether FTB was entitled to immunity, and
                thus, we did not address the merits of Hyatt's claims.

SUPREME COURT
        OF
     NEVADA
                                                      25
(0) I94Th
                 Hyatt's favor on those claims and awarded him $52 million for invasion of
                 privacy damages. Because the parties' arguments regarding intrusion and
                 disclosure overlap, we discuss those privacy torts together, and we follow
                 that discussion by addressing the false light invasion of privacy tort.
                             Intrusion upon seclusion and public disclosure of private facts
                             On appeal, Hyatt focuses his invasion of privacy claims on
                 FTB's disclosures of his name, address, and social security number to
                 various individuals and entities. FTB contends that Hyatt's claims fail
                 because the information disclosed had been disseminated in prior public
                 records, and thus, could not form the basis of an invasion of privacy claim.
                             Intrusion upon seclusion and public disclosure of private facts
                 are torts grounded in a plaintiff's objective expectation of privacy.     PETA,
111 Nev. at 630, 631, 895 P.2d at 1279 (recognizing that the plaintiff must
                 actually expect solitude or seclusion, and the plaintiffs expectation of
                 privacy must be objectively reasonable); Montesano v. Donrey Media Grp.,
                 99 Nev. 644, 649, 668 P.2d 1081, 1084 (1983) (stating that the public
                 disclosure of a private fact must be "offensive and objectionable to a
                 reasonable person of ordinary sensibilities"); see also Restatement
                 (Second) of Torts § 652B, 652D (1977). One defense to invasion of privacy
                 torts, referred to as the public records defense, arises when a defendant
                 can show that the disclosed information is contained in a court's official
                 records. Montesano, 99 Nev. at 649, 668 P.2d at 1085. Such materials are
                 public facts, id., and a defendant cannot be liable for disclosing
                 information about a plaintiff that was already public. Restatement
                 (Second) of Torts § 652D cmt. b (1977).
                             Here, the record shows that Hyatt's name, address, and social
                 security number had been publicly disclosed on several occasions, before
                 FTB's disclosures occurred, in old court documents from his divorce
SUPREME COURT
        OF
     NEVADA
                                                       26
(0) 1947A    e
                 proceedings and in a probate case. Hyatt also disclosed the information
                 himself when he made the information available in various business
                 license applications completed by Hyatt. Hyatt maintains that these
                 earlier public disclosures were from long ago, and that the disclosures
                 were only in a limited number of documents, and therefore, the
                 information should not be considered as part of the public domain. Hyatt
                 asserts that this results in his objective expectation of privacy in the
                 information being preserved.
                             This court has never limited the application of the public
                 records defense based on the length of time between the public disclosure
                 and the alleged invasion of privacy. In fact, in Montesano, 99 Nev. 644,
                 668 P.2d 1081, we addressed disclosed information contained in a public
                 record from 20 years before the disclosure at issue there and held that the
                 protection still applied. Therefore, under the public records defense, as
                 delineated in Montesano, Hyatt is precluded from recovering for invasion
                 of privacy based on the disclosure of his name, address, and social security
                 number, as the information was already publicly available, and he thus
                 lacked an objective expectation of privacy in the information. 7

                       7 Beyond his name, address, and social security number, Hyatt also
                 alleged improper disclosures related to the publication of his credit card
                 number on one occasion and his licensing contracts on another occasion.
                 But this information was only disclosed to one or two third parties, and it
                 was information that the third parties already had in their possession
                 from prior dealings with Hyatt. Thus, we likewise conclude that Hyatt
                 lacked an objective expectation of privacy as a matter of law. PETA, 111
                 Nev. at 631, 895 P.2d at 1279; Montesano, 99 Nev. at 649, 668 P.2d at
                 1084.

SUPREME COURT
        OF
     NEVADA
                                                      27
(0) 1947A    e
                            Because Hyatt cannot meet the necessary requirements to
                establish his invasion of privacy causes of action for intrusion upon
                seclusion and public disclosure of private facts, we reverse the district
                court's judgment based on the jury verdict as to these causes of action. 8
                            False light invasion of privacy
                            Regarding Hyatt's false light claim, he argues that FTB
                portrayed him in a false light throughout its investigation because FTB's
                various disclosures portrayed Hyatt as a "tax cheat." FTB asserts that
                Hyatt failed to provide any evidence to support his claim. Before reaching
                the parties' arguments as to Hyatt's false light claim, we must first
                determine whether to adopt this cause of action in Nevada, as this court
                has only impliedly recognized the false light invasion of privacy tort. See
                PETA, 111 Nev. at 622 n.4, 629, 895 P.2d at 1273 n.4, 1278. "Whether to
                adopt [this tort] as [a] viable tort claim1 ] is a question of state law."
                Denver Publ'g Co. v. Bueno, 54 P.3d 893, 896 (Colo. 2002).
                                  Adopting the false light invasion of privacy tort
                            Under the Restatement, an action for false light arises when
                            [o]ne who gives publicity to a matter concerning
                            another that places the other before the public in a
                            false light .. . if

                      8 Hyatt also argues that FTB violated his right to privacy when its
                agents looked through his trash, looked at a package on his doorstep, and
                spoke with neighbors, a postal carrier, and a trash collector. Hyatt does
                not provide any authority to support his assertion that he had a legally
                recognized objective expectation of privacy with regard to FTB's conduct in
                these instances, and thus, we decline to consider this contention. See
                Edwards v. Emperor's Garden Rest., 122 Nev. 317, 330 n.38, 130 P.3d
1280, 1288 n.38 (2006) (explaining that this court need not consider claims
                that are not cogently argued or supported by relevant authority).

SUPREME COURT
        OF
     NEVADA
                                                     28
(0) 1947A
                               (a) the false light in which the other was placed
                               would be highly offensive to a reasonable person,
                               and
                               (b) the actor had knowledge of or acted in reckless
                               disregard as to the falsity of the publicized matter
                               and the false light in which the other would be
                               placed.
                Restatement (Second) of Torts § 652E (1977). The greatest constraint on
                the tort of false light is its similarity to the tort of defamation.
                               A majority of the courts that have adopted the false light
                privacy tort have done so after concluding that false light and defamation
                are distinct torts. 9 See Welling v. Weinfeld, 866 N.E.2d 1051 (Ohio 2007)
                (explaining the competing views); West v. Media Gen. Convergence, Inc., 53
S.W.3d 640 (Tenn. 2001) (same). For these courts, defamation law seeks
                to protect• an objective interest in one's reputation, "either economic,
                political, or personal, in the outside world." Crump v. Beckley Newspapers,
                Inc., 320 S.E.2d 70, 83 (W. Va. 1984) (internal quotations omitted). By
                contrast, false light invasion of privacy protects one's subjective interest in
                freedom from injury to the person's right to be left alone.       Id. Therefore,
                according to these courts there are situations (being falsely portrayed as a
                victim of a crime, such as sexual assault, or being falsely identified as
                having a serious illness, or being portrayed as destitute) in which a person
                may be placed in a harmful false light even though it does not rise to the

                      9 This court, in PETA, while not reaching the false light issue,
                observed that 'Mlle false light privacy action differs from a defamation
                action in that the injury in privacy actions is mental distress from having
                been exposed to public view, while the injury in defamation actions is
                damage to reputation.'" 111 Nev. at 622 n.4, 895 P.2d at 1274 n.4 (quoting
                Rinsley v. Brandt, 700 F.2d 1304, 1307 (10th Cir. 1983)).

SUPREME COURT
        OF
     NEVADA
                                                        29
(0) 1947A
                   level of defamation. Welling, 866 N.E.2d at 1055-57; West, 53 S.W.3d at
                   646. Without recognizing the separate false light privacy tort, such an
                   individual would be left without a remedy. West, 53 S.W.3d at 646.
                                 On the other hand, those courts that have declined to adopt
                   the false light tort have done so based on its similarity to defamation. See,
                   e.g., Sullivan v. Pulitzer Broad. Co., 709 S.W.2d 475 (Mo. 1986); Renwick
                   v. News & Observer Pubrg Co., 312 S.E.2d 405 (N.C. 1984); Cain v. Hearst
                   Corp., 878 S.W.2d 577 (Tex. 1994). "The primary objection courts level at
                   false light is that it substantially overlaps with defamation, both in
                   conduct alleged and interests protected." Denver Pubrg Co., 54 P.3d at
                   898. For these courts, tort law serves to deter "socially wrongful conduct,"
                   and thus, it needs "clarity and certainty."         Id.   And because the
                   parameters defining the difference between false light and defamation are
                   blurred, these courts conclude that "such an amorphous tort risks chilling
                   fundamental First Amendment freedoms." Id. In such a case, a media
                   defendant would have to "anticipate whether statements are 'highly
                   offensive' to a reasonable person of ordinary sensibilities even though their
                   publication does no harm to the individual's reputation."        Id. at 903.
                   Ultimately, for these courts, defamation, appropriation, and intentional
                   infliction of emotional distress provide plaintiffs with adequate remedies.
                   Id. at 903.
                                 Considering the different approaches detailed above, we, like
                   the majority of courts, conclude that a false light cause of action is
                   necessary to fully protect privacy interests, and we now officially recognize
                   false light invasion of privacy as a valid cause of action in connection with
                   the other three privacy causes of action that this court has adopted.
                   Because we now recognize the false light invasion of privacy cause of

SUPREME COURT
        OF
     NEVADA
                                                        30
(0) 1947A    ADD
                action, we address FTB's substantive arguments regarding Hyatt's false
                light claim.
                                     Hyatt's false light claim
                               The crux of Hyatt's false light invasion of privacy claim is that
                FTB's demand-for-information letters, its other contact with third parties
                through neighborhood visits and questioning, and the inclusion of his case
                on FTB's litigation roster suggested that he was a "tax cheat," and
                therefore, portrayed him in a false light. On appeal, FTB argues that
                Hyatt presented no evidence that anyone thought that he was a "tax
                cheat" based on the litigation roster or third-party contacts.
                               FTB's litigation roster was an ongoing monthly litigation list
                that identified the cases that FTB was involved in. The list was available
                to the public and generally contained audit cases in which the protest and
                appeal process had been completed and the cases were being litigated in
                court. After Hyatt initiated this litigation, FTB began including the case
                on its roster, which Hyatt asserts was improper because the protests in his
                audits had not yet been completed. FTB, however, argues that because
                the lawsuit was ongoing, it did not place Hyatt in a false light by including
                him on the roster. Further, FTB argues that the litigation roster that
                Hyatt relied on was not false. When FTB began including Hyatt on the
                litigation roster, he was not falsely portrayed because he was indeed
                involved in litigation with FTB in this case. Hyatt did not demonstrate
                that the litigation roster contained any false information. Rather, he only
                argued that his inclusion on the list was improper because his audit cases
                had not reached the final challenge stage like other cases on the roster.
                               FTB's contacts with third parties' through letters, demands for
                information, or in person was not highly offensive to a reasonable person

SUPREME COURT
         OF
      NEVADA
                                                        31
(0) P.147A
                  and did not falsely portray Hyatt as a "tax cheat." In contacting third
                  parties, FTB was merely conducting its routine audit investigations.
                              The record before us reveals that no evidence presented by
                  Hyatt in the underlying suit supported the jury's conclusion that FTB
                  portrayed Hyatt in a false light. See Prabhu, 112 Nev. at 1543, 930 P.2d
                  at 107. Because Hyatt has failed to establish a false light claim, we
                  reverse the district court's judgment on this claim. 10
                              Having addressed Hyatt's invasion of privacy causes of action,
                  we now consider FTB's challenges to Hyatt's remaining causes of action
                  for breach of confidential relationship, abuse of process, fraud, and
                  intentional infliction of emotional distress.
                        Breach of confidential relationship
                              A breach of confidential relationship cause of action arises "by
                  reason of kinship or professional, business, or social relationships between
                  the parties." Perry v. Jordan, 111 Nev. 943, 947, 900 P.2d 335, 337 (1995).
                  On appeal, FTB contends that Hyatt could not prevail as a matter of law
                  on his claim for breach of a confidential relationship because he cannot
                  establish the requisite confidential relationship. In the underlying case,
                  the district court denied FTB's motion for summary judgment and its
                  motion for judgment as a matter of law, which presented similar
                  arguments, and at trial the jury found FTB liable on this cause of action.
                  Hyatt argues that his claim for breach of confidentiality falls within the
                  parameters of Perry because FTB promised to protect his confidential

                       mBased on this resolution, we need not address the parties'
                  remaining arguments involving this cause of action.

SUPREME COURT
      OF
    NEVADA
                                                        32
(0) 1947A .7e04
                 information and its position over Hyatt during the audits established the
                 necessary confidential relationship.n
                             In Perry, this court recognized that a confidential relationship
                 exists when a party gains the confidence of another party and purports to
                 advise or act consistently with the other party's interest.   Id. at 947, 900
                 P.2d at 338. In that case, store owner Perry sold her store to her neighbor
                 and friend, Jordan, knowing that Jordan had no business knowledge, that
                 Jordan was buying the store for her daughters, not for herself, and that
                 Jordan would rely on Perry to run the store for a contracted one-year
                 period after the sale was complete. Id. at 945-46, 900 P.2d at 336-37. Not
                 long after the sale, Perry stopped running the store, and the store
                 eventually closed. Id. at 946, 900 P.2d at 337. Jordan filed suit against
                 Perry for, among other things, breach of a confidential relationship. Id. A
                 jury found in Jordan's favor and awarded damages. Id. Perry appealed,
                 arguing that this court had not recognized a claim for breach of a
                 confidential relationship. Id.
                             On appeal, this court ruled that a breach of confidential
                 relationship claim was available under the facts of the case.     Id. at 947,
                 900 P.2d at 338. The court noted that Perry "held a duty to act with the
                 utmost good faith, based on her confidential relationship with Jordan[,
                 and that the] duty requires affirmative disclosure and avoidance of self
                 dealing." Id. at 948, 900 P.2d at 338. The court explained that "[w]hen a

                       11 FTB  initially argues that Hyatt attempts to blend the cause of
                 action recognized in Perry with a separate breach of confidentiality cause
                 of action that, while recognized in other jurisdictions, has not been
                 recognized by this court. We reject this contention, as the jury was
                 instructed based on the cause of action outlined in Perry.

SUPREME COURT
        OF
     NEVADA

                                                      33
(0) 1947A    e
                 confidential relationship exists, the person in whom the special trust is
                 placed owes a duty to the other party similar to the duty of a fiduciary,
                 requiring the person to act in good faith and with due regard to the
                 interests of the other party." Id. at 947, 900 P.2d at 338.
                             FTB contends that the relationship between a tax auditor and
                 the person being audited does not create the necessary relationship
                 articulated in Perry to establish a breach of confidential relationship cause
                 of action. In support of this proposition, FTB cites to Johnson v. Sawyer,
                 which was heard by the Fifth Circuit Court of Appeals. 47 F.3d 716 (5th
                 Cir. 1995) (en bane). In Johnson, the plaintiff sought damages from press
                 releases by the Internal Revenue Service (IRS) based on a conviction for
                 filing a fraudulent tax return. Id. at 718. Johnson was criminally charged
                 based on erroneous tax returns.      Id. at 718-19. He eventually pleaded
                 guilty to a reduced charge as part of a plea bargain.         Id. at 718-20.
                 Following the plea agreement, two press releases were issued that
                 contained improper and private information about Johnson. Id. at 720-21.
                 Johnson filed suit against the IRS based on these press releases, arguing
                 that they cost him his job and asserting several causes of action, one being
                 breach of a confidential relationship. Id. at 718, 725, 738. On appeal, the
                 Fifth Circuit Court of Appeals affirmed the district court's ruling that a
                 breach of a confidential relationship could not be maintained based on the
                 relationship between Johnson and the IRS, as it was clear that the two
                 parties "stood in an adversarial relationship." Id. at 738 n.47.
                             Hyatt rejects FTB's reliance on this case, arguing that the
                 Johnson ruling is inapposite to the present case because, here, FTB made
                 express promises regarding protecting Hyatt's confidential information
                 but then failed to keep those promises. Hyatt maintains that although

SUPREME COURT
        OF
     NEVADA

(0) 1947A    e                                        34
                      FTB may not have acted in his best interest in every aspect of the audits,
                      as to keeping his information confidential, FTB affirmatively undertook
                      that responsibility and breached that duty by revealing confidential
                      information.
                                  But in conducting the audits, FTB was not required to act
                      with Hyatt's interests in mind; rather, it had a duty to proceed on behalf of
                      the state of California's interest. Johnson, 47 F.3d at 738 n.47. Moreover,
                      the parties' relationship was not akin to a family or business relationship.
                      Perry, 111 Nev. at 947, 900 P.2d at 337-38. Hyatt argues for a broad
                      range of relationships that can meet the requirement under Perry, but we
                      reject this contention.     Perry does not provide for so expansive a
                      relationship as Hyatt asks us to recognize as sufficient to establish a claim
                      for a breach of confidential relationship. 12 Thus, FTB and Hyatt's
                      relationship cannot form the basis for a breach of a confidential
                      relationship cause of action, and this cause of action fails as a matter of
                      law. The district court judgment in Hyatt's favor on this claim is reversed.
                            Abuse of process
                                  A successful abuse of process claim requires -(1) an ulterior
                      purpose by the defendants other than resolving a legal dispute, and (2) a
                      willful act in the use of the legal process not proper in the regular conduct
                      of the proceeding." LaMantia v. Redisi, 118 Nev. 27, 30, 38 P.3d 877, 879

                            12Further,  we note that the majority of cases that Hyatt cites as
                      authority for a more expansive viewpoint of a confidential relationship
                      involve claims arising from a doctor-patient confidentiality privilege,
                      which does not apply here. See, e.g., Doe v. Medlantic Health Care Grp.,
                      Inc., 814 A.2d 939, 950-51 (D.C. 2003); Humphers v. First Interstate Bank
                      of Or., 696 P.2d 527, 533-35 (Or. 1985).

SUPREME COURT
        OF

     NEVADA
                                                           35
(0) IATTA    ..Dgpo
                   (2002) (quoting Posadas v. City of Reno, 109 Nev. 448, 457, 851 P.2d 438,
                   444-45 (1993)). Put another way, a plaintiff must show that the defendant
                   "willfully and improperly used the legal process to accomplish" an ulterior
                   purpose other than resolving a legal dispute.      Id. at 31, 38 P.3d at 880
                   (emphasis added).
                               FTB asserts that it was entitled to judgment as a matter of
                   law on Hyatt's abuse of process cause of action because it did not actually
                   use the judicial process, as it never sought to judicially enforce compliance
                   with the demand-for-information forms and did not otherwise use the
                   judicial process in conducting its audits of Hyatt. In response, Hyatt
                   argues that FTB committed abuse of process by sending demand-for-
                   information forms to individuals and companies in Nevada that are not
                   subject to the California law cited in the form.
                               Because FTB did not use any legal enforcement process, such
                   as filing a court action, in relation to its demands for information or
                   otherwise during the audits, Hyatt cannot meet the requirements for
                   establishing an abuse of process claim. LaMantia, 118 Nev. at 31, 38 P.3d
                   at 880; ComputerXpress, Inc. v. Jackson, 113 Cal. Rptr. 2d 625, 644 (Ct.
                   App. 2001) (explaining that abuse of process only arises when there is
                   actual "use of the machinery of the legal system for an ulterior motive"
                   (internal quotations omitted)); see also Tuck Beckstoffer Wines L.L.C. v.
                   Ultimate Distribs., Inc., 682 F. Supp. 2d 1003, 1020 (N.D. Cal. 2010). On
                   this cause of action, then, FTB is entitled to judgment as a matter of law,
                   and we reverse the district court's judgment.
                         Fraud
                               To prove a fraud claim, the plaintiff must show that the
                   defendant made a false representation that the defendant knew or
                   believed was false, that the defendant intended to persuade the plaintiff to
SUPREME COURT
        OF
     NEVADA

(0) 1947A    ez.
                                                         36
                act or not act based on the representation, and that the plaintiff had
                reason to rely on the representation and suffered damages. Bulb man, Inc.
                v. Nev. Bell, 108 Nev. 105, 111, 825 P.2d 588, 592 (1992). It is the jury's
                role to make findings on the factors necessary to establish a fraud claim.
                Powers v. United Servs. Auto, Ass'n, 114 Nev. 690, 697-98, 962 P.2d 596,
                600-01 (1998). This court will generally not disturb a jury's verdict that is
                supported by substantial evidence. Taylor v. Thunder, 116 Nev. 968, 974,
                13 P.3d 43, 46 (2000). Substantial evidence is defined as "evidence that a
                reasonable mind might accept as adequate to support a conclusion."
                Wine/tell v. Schiff, 124 Nev. 938, 944, 193 P.3d 946, 950 (2008) (internal
                quotations omitted).
                            When Hyatt's 1991 audit began, FTB informed him that
                during the audit process Hyatt could expect FTB employees to treat him
                with courtesy, that the auditor assigned to his case would clearly and
                concisely request information from him, that any personal and financial
                information that he provided to FTB would be treated confidentially, and
                that the audit would be completed within a reasonable time. FTB
                contends that its statements in documents to Hyatt, that it would provide
                him with courteous treatment and keep his information confidential, were
                insufficient representations to form a basis for a fraud claim, and even if
                the representations were sufficient, there was no evidence that FTB knew
                that they were false when made. In any case, FTB argues that Hyatt did
                not prove any reliance because he was required to participate in the audits
                whether he relied on these statements or not. Hyatt asserts that FTB
                knowingly misrepresented its promise to treat him fairly and impartially
                and to protect his private information. For the reasons discussed below,

SUPREME COURT
         OF
      NEVADA
                                                     37
,91) 1947A
                we reject FTB's argument that it was entitled to judgment as a matter of
                law on Hyatt's fraud claim.
                              The record before us shows that a reasonable mind could
                conclude that FTB made specific representations to Hyatt that it intended
                for Hyatt to rely on, but which it did not intend to fully meet. FTB
                represented to Hyatt that it would protect his confidential information and
                treat him courteously. At trial, Hyatt presented evidence that FTB
                disclosed his social security number and home address to numerous people
                and entities and that FTB revealed to third parties that Hyatt was being
                audited. In addition, FTB sent letters concerning the 1991 audit to
                several doctors with the same last name, based on its belief that one of
                those doctors provided Hyatt treatment, but without first determining
                which doctor actually treated Hyatt before sending the correspondence.
                Furthermore, Hyatt showed that FTB took 11 years to resolve Hyatt's
                protests of the two audits. Hyatt alleged that this delay resulted in $8,000
                in interest per day accruing against him for the outstanding taxes owed to
                California. Also at trial, Hyatt presented evidence through Candace Les, a
                former FTB auditor and friend of the main auditor on Hyatt's audit,
                Sheila Cox, that Cox had made disparaging comments about Hyatt and his
                religion, that Cox essentially was intent on imposing an assessment
                against Hyatt, and that FTB promoted a culture in which tax assessments
                were the end goal whenever an audit was undertaken. Hyatt also testified
                that he would not have hired legal and accounting professionals to assist
                in the audits had he known how he would be treated. Moreover, Hyatt
                stated that he incurred substantial costs that he would not otherwise have
                incurred by paying for professional representatives to assist him during
                the audits.

SUPREME COURT
         OF
      NEVADA
                                                     38
(0) 1947f)
                            The evidence presented sufficiently showed FTB's improper
                motives in conducting Hyatt's audits, and a reasonable mind could
                conclude that FTB made fraudulent representations, that it knew the
                representations were false, and that it intended for Hyatt to rely on the
                representations. 13 What's more, the jury could reasonably conclude that
                Hyatt relied on FTB's representations to act and participate in the audits
                in a manner different than he would have otherwise, which resulted in
                damages. Based on this evidence, we conclude that substantial evidence
                supports each of the fraud elements and that FTB is not entitled to
                judgment as a matter of law on this cause of action. 14

                      13 FTB's  argument concerning government agents making
                representations beyond the scope of law is without merit.

                      14 FTB  further argues that several evidentiary errors by the district
                court warrant a new trial. These errors include admitting evidence
                concerning whether the audit conclusions were correct and excluding
                FTB's evidence seeking to rebut an adverse inference for spoliation of
                evidence. FTB also asserts that the district court improperly instructed
                the jury by permitting it to consider the audit determinations. Although
                we agree with FTB that the district court abused its discretion in these
                evidentiary rulings and in its jury instruction number 24, as discussed
                more fully below in regard to Hyatt's intentional infliction of emotional
                distress claim, we conclude that these errors were harmless as to Hyatt's
                fraud claim because sufficient evidence of fraud existed for the jury to find
                in Hyatt's favor on each required element for fraud. See Cook v. Sunrise
                Hosp. & Med. Ctr., L.L.C., 124 Nev. 997, 1006, 194 P.3d 1214, 1219 (2008)
                (holding that when there is error in a jury instruction, "prejudice must be
                established in order to reverse a district court judgment," and this is done
                by "showing that, but for the error, a different result might have been
                reached"); El Cortez Hotel, Inc. v. Coburn, 87 Nev. 209, 213, 484 P.2d 1089,
                1091 (1971) (stating that an evidentiary error must be prejudicial in order
                to warrant reversal and remand).

SUPREME COURT
        OF
     NEVADA
                                                     39
(0) I947A
                       Fraud damages
                                Given our affirmance of the district court's judgment on the
                 jury verdict in Hyatt's favor on his fraud claim, we turn to FTB's challenge
                 as to the special damages awarded Hyatt on his fraud claim. 16 In doing so,
                 we address whether FTB is entitled to statutory caps on the amount of
                 damages recoverable to the same extent that a Nevada government
                 agency would receive statutory caps under principles of comity. 16 NRS
                 41.035 provides a statutory cap on liability damages in tort actions
                 "against a present or former officer or employee of the State or any
                 political subdivision." FTB argues that because it is immune from liability
                 under California law, and Nevada provides a statutory cap on liability
                 damages, it is entitled to the statutory cap on its liability to the extent
                 that the law does not conflict with Nevada policy. Hyatt asserts that
                 applying the statutory caps would in fact violate Nevada policy because
                 doing so would not sufficiently protect Nevada residents. According to
                 Hyatt, limitless compensatory damages are necessary as a means to

                       16 The  jury verdict form included a separate damage award for
                 Hyatt's fraud claim. We limit our discussion of Hyatt's fraud damages to
                 these special damages that were awarded. To the extent that Hyatt
                 argues that he is entitled to other damages for his fraud claim beyond the
                 special damages specified in the jury verdict form, we reject this argument
                 and limit any emotional distress damages to his recovery under his
                 intentional infliction of emotional distress claim, as addressed below.

                       16 FTB  argues that under the law-of-the-ease doctrine, comity applies
                 to afford it a statutory cap on damages and immunity from punitive
                 damages based on this court's conclusions in the earlier writ petitions.
                 But this court did not previously address these issues and the issues are
                 different, thus, law of the case does not apply. Dictor v. Creative Mgmt.
                 Servs., 126 Nev. 41, 44-45, 223 P.3d 332, 334-35 (2010).

SUPREME COURT
        OF
     NEVADA
                                                       40
(0) 1947A    e
                 control non-Nevada government actions. Hyatt claims that statutory caps
                 for Nevada government actions work because Nevada can control its
                 government entities and employees through other means, such as
                 dismissal or other discipline, that are not available to control an out-of-
                 state government entity. Additionally, Hyatt points out that there are
                 other reasons for the statutory caps that are specificS only to Nevada, such
                 as attracting state employees by limiting potential liability. Therefore,
                 Hyatt argues that FTB is not entitled to statutory caps under comity
                 because it would violate Nevada's superior policy of protecting its
                 residents from injury.
                             The parties base their arguments on precedent from other
                 courts that have taken different approaches to the issue. FTB primarily
                 relies on a New Mexico Supreme Court case, Sam v. Estate of Sam, 134
P.3d 761 (N.M. 2006), and Hyatt supports his arguments by mainly
                 relying on Faulkner v. University of Tennessee, 627 So. 2d 362 (Ala. 1992).
                             In Sam, an employee of an Arizona government entity
                 accidentally backed over his child while driving his employer's vehicle at
                 his home in New Mexico. 134 P.3d at 763. In a lawsuit arising out of this
                 accident, the issue before the Sam court was whether Arizona's one-year
                 statute of limitation for government employees, or New Mexico's two-year
                 statute of limitation for government employees or three-year general tort
                 statute of limitation law should apply. Id. at 764. The court discussed the
                 comity doctrine and concluded that New Mexico's two-year statute of
                 limitations for government employees applied because by doing so it was
                 recognizing Arizona's law to the extent that it did not conflict with New
                 Mexico's law. Id. at 764-68.

SUPREME COURT
        OF
     NEVADA
                                                      41
(0) 1947A    e
                                In reaching this conclusion, the Sam court relied on the
                    United States Supreme Court's holdings in Nevada v. Hall, 440 U.S. 410
                    (1979), and Franchise Tax Board of California v. Hyatt, 538 U.S. 488
                    (2003). Sam, 134 P.3d at 765-66. The Sam court stated that "Lbloth these
                    cases stand for the principle that a forum state is not required to extend
                    immunity to other states sued in its courts, but the forum state should
                    extend immunity as a matter of comity if doing so will not violate the
                    forum state's public policies."   Id. at 765. Based on this framework for
                    comity, the Sam court concluded that Arizona should be entitled to the
                    statute of limitations for government agencies that New Mexico would
                    provide to its government agencies. Most courts appear to follow FTB's
                    argument regarding how comity applies and that a state should recognize
                    another state's laws to the extent that they do not conflict with its own.
                    See generally Solomon v. Supreme Court of Fla., 816 A.2d 788, 790 (D.C.
                    2002); Schoeberlein v. Purdue Univ., 544 N.E.2d 283, 285 (Ill. 1989);
                    McDonnell v. Illinois, 748 A.2d 1105, 1107 (N.J. 2000); Sam, 134 P.3d at
                    765; Hansen v. Scott, 687 N.W.2d 247, 250 (N.D. 2004).
                                In Faulkner, the plaintiff filed a lawsuit against the
                    University of Tennessee after it threatened to revoke plaintiffs doctoral
                    degree. 627 So. 2d at 363-64. The issue in Faulkner was whether the
                    University of Tennessee (UT) was entitled to discretionary immunity
                    under comity, when both Tennessee and Alabama had similar
                    discretionary-immunity provisions for their states' government entities.
                    Id. at 366. Considering the policy of allowing residents legal redress,
                    compared to the immunity policies that both states had, the Faulkner
                    court observed that
                                [wile cannot, absent some overriding policy, leave
                                Alabama residents without redress within this
SUPREME COURT
       OF
    NEVADA
                                                         42
(0) 1947.4 .1t4.4
                                State, relating to alleged acts of wrongdoing by an
                                agency of another State, where those alleged acts
                                are associated with substantial commercial
                                activities in Alabama. We conclude that comity is
                                not such an overriding policy in this instance.
                    Id.   The court rejected the argument that granting comity would not
                    violate Alabama policy because its residents were used to Alabama
                    government entities receiving immunity:
                                Agencies of the State of Alabama are subject to
                                legislative control, administrative oversight, and
                                public accountability in Alabama; UT is not.
                                Actions taken by an agency or instrumentality of
                                this state are subject always to the will of the
                                democratic process in Alabama. UT, as an
                                instrumentality of the State of Tennessee,
                                operates outside such controls in this State.
                    Id, The Faulkner court ultimately declined to grant UT immunity under
                    comity. We are persuaded by the Faulkner court's reasoning.
                                This state's policy interest in providing adequate redress to
                    Nevada citizens is paramount to providing FTB a statutory cap on
                    damages under comity. Therefore, as we conclude that allowing FTB a
                    statutory cap would violate this state's public policy in this area, comity
                    does not require this court to grant FTB such relief. Id.; Sam, 134 P.3d at
                    765 (recognizing that a state is not required to extend immunity and
                    comity only dictates doing so if it does not contradict the forum state's
                    public policy). As this is the only argument FTB raised in regard to the
                    special damages awarded under the fraud cause of action, we affirm the
                    amount of damages awarded for fraud. The prejudgment interest awarded
                    is vacated and remanded to the district court for a recalculation based on
                    the damages for fraud that we uphold. In light of our ruling that only the
                    special award of damages for fraud is affirmed, FTB's argument that

SUPREME COURT
       OF
    NEVADA
                                                        43
(0) 1947A 461a49.
                prejudgment interest is not allowed because future damages were
                interwoven with past damages is moot.
                      Intentional infliction of emotional distress
                            During discovery in the underlying case, Hyatt refused to
                disclose his medical records. As a result, he was precluded at trial from
                presenting any medical evidence of severe emotional distress.
                Nevertheless, at trial, Hyatt presented evidence designed to demonstrate
                his emotional distress in the form of his own testimony regarding the
                emotional distress he experienced, along with testimony from his son and
                friends detailing their observation of changes in Hyatt's behavior and
                health during the audits. Based on this testimony, the jury found in
                Hyatt's favor on his intentional infliction of emotional distress (TIED)
                claim and awarded him $82 million for emotional distress damages.
                            To recover on a claim for TIED, a plaintiff must prove "(1)
                extreme and outrageous conduct on the part of the defendant; (2) intent to
                cause emotional distress or reckless disregard for causing emotional
                distress; (3) that the plaintiff actually suffered extreme or severe
                emotional distress; and (4) causation."     Miller v. Jones, 114 Nev. 1291,
                1299-1300, 970 P.2d 571, 577 (1998); see also Bannettler u. Reno Air, Inc.,
                114 Nev. 441, 447, 956 P.2d 1382, 1386 (1998). A plaintiff must set forth
                "objectively verifiable indicia" to establish that the plaintiff "actually
                suffered extreme or severe emotional distress." Miller, 114 Nev. at 1300,
                970 P.2d at 577.
                            On appeal, FTB argues that Hyatt failed to establish that he
                actually suffered severe emotional distress because he failed to provide
                any medical evidence or other objectively verifiable evidence to establish
                such a claim. In response, Hyatt contends that the testimony provided by
                his family and other acquaintances sufficiently established objective proof
SUPREME COURT
        OF
     NEVADA
                                                      44
(0) 1947A
                of the severe and extreme emotional distress he suffered, particularly in
                light of the facts of this case demonstrating the intentional harmful
                treatment he endured from FTB. Hyatt asserts that the more severe the
                harm, the lower the amount of proof necessary to establish that he
                suffered severe emotional distress. While this court has held that
                objectively verifiable evidence is necessary in order to establish an TIED
                claim, id., we have not specifically addressed whether this necessarily
                requires medical evidence or if other objective evidence is sufficient.
                            The Restatement (Second) of Torts § 46 (1977), in comments j
                and k, provide for a sliding-scale approach in which the increased severity
                of the conduct will require less in the way of proof that emotional distress
                was suffered in order to establish an TIED claim. Restatement (Second) of
                Torts § 46 cmt. j (1977) ("The intensity and the duration of the distress are
                factors to be considered in determining its severity. Severe distress must
                be proved; but in many cases the extreme and outrageous character of the
                defendant's conduct is in itself important evidence that the distress has
                existed."); Restatement (Second) of Torts § 46 cmt. k (1977) (stating that
                "if the enormity of the outrage carries conviction that there has in fact
                been severe emotional distress, bodily harm is not required"). This court
                has also impliedly recognized this sliding-scale approach, although stated
                in the reverse. Nelson v. City of Las Vegas, 99 Nev. 548, 665 P.2d 1141
                (1983). In Nelson, this court explained that "Wile less extreme the
                outrage, the more appropriate it is to require evidence of physical injury or
                illness from the emotional distress." Id. at 555, 665 P.2d at 1145.
                            Further, other jurisdictions that require objectively verifiable
                evidence have determined that such a mandate does not always require
                medical evidence. See Lyman v. Hither, 10 A.3d 707 (Me. 2010) (stating

SUPREME COURT
     OF
   NEVADA
                                                      45
(0) 194Th e
                that medical testimony is not mandatory to establish an TIED claim,
                although only in rare, extreme circumstances);         Buckman-Peirson v.
                Brannon, 822 N.E.2d 830, 840-41 (Ohio Ct. App. 2004) (stating that
                medical evidence is not required, but also holding that something more
                than just the plaintiffs own testimony was necessary); see also Dixon v.
                Denny's, Inc., 957 F. Supp. 792, 796 (E.D. Va. 1996) (stating that plaintiff
                failed to establish an TIED claim because plaintiff did not provide objective
                evidence, such as medical bills "or even the testimony of friends or
                family"). Additionally, in Farmers Home Mutual Insurance Co. v. Fiscus,
                102 Nev. 371, 725 P.2d 234 (1986), this court upheld an award for mental
                and emotional distress even though the plaintiffs' evidence did not include
                medical evidence or testimony. Id. at 374-75, 725 P.2d at 236. While not
                specifically addressing an TIED claim, the Fiscus court addressed the
                recovery of damages for mental and emotional distress that arose from an
                insurance company's unfair settlement practices when the insurance
                company denied plaintiffs' insurance claim after their home had flooded.
                Id. at 373, 725 P.2d at 235. In support of the claim for emotional and
                mental distress damages, the husband plaintiff testified that he and his
                wife lost the majority of their personal possessions and that their house
                was uninhabitable, that because the claim had been rejected they lacked
                the money needed to repair their home and the house was condemned, and
                after meeting with the insurance company's representative the wife had
                an emotional breakdown. Id. at 374, 725 P.2d at 236. This court upheld
                the award of damages, concluding that the above evidence was sufficient
                to prove that plaintiffs had suffered mental and emotional distress. Id. at
                374-75, 725 P.2d at 236. In so holding, this court rejected the insurance
                company's argument that there was insufficient proof of mental and

SUPREME COURT
        OF
     NEVADA
                                                     46
(0) 1947A
                emotional distress because there was no medical evidence or independent
                witness testimony. Id.
                            Based on the foregoing, we now specifically adopt the sliding-
                scale approach to proving a claim for TIED. Under this sliding-scale
                approach, while medical evidence is one acceptable manner in establishing
                that severe emotional distress was suffered for purposes of an TIED claim,
                other objectively verifiable evidence may suffice to establish a claim when
                the defendant's conduct is more extreme, and thus, requires less evidence
                of the physical injury suffered.
                            Turning to the facts in the present case, Hyatt suffered
                extreme treatment from FTB. As explained above in discussing the fraud
                claim, FTB disclosed personal information that it promised to keep
                confidential and delayed resolution of Hyatt's protests for 11 years,
                resulting in a daily interest charge of $8,000. Further, Hyatt presented
                testimony that the auditor who conducted the majority of his two audits
                made disparaging remarks about Hyatt and his religion, was determined
                to impose tax assessments against him, and that FTB fostered an
                environment in which the imposition of tax assessments was the objective
                whenever an audit was undertaken. These facts support the conclusion
                that this case is at the more extreme end of the scale, and therefore less in
                the way of proof as to emotional distress suffered by Hyatt is necessary.
                            In support of his TIED claim, Hyatt presented testimony from
                three different people as to the how the treatment from FTB caused Hyatt
                emotional distress and physically affected him. This included testimony of
                how Hyatt's mood changed dramatically, that he became distant and much
                less involved in various activities, started drinking heavily, suffered
                severe migraines and had stomach problems, and became obsessed with

SUPREME COURT
        OF
     NEVADA

(0) 1947A
                                                     47
                the legal issues involving FTB. We conclude that this evidence, in
                connection with the severe treatment experienced by Hyatt, provided
                sufficient evidence from which a jury could reasonably determine that
                Hyatt suffered severe emotional distress. 17 Accordingly, we affirm the
                judgment in favor of Hyatt on this claim as to liability. As discussed
                below, however, we reverse the award of damages on this claim and
                remand for a new trial as to damages on this claim only.
                              A new trial is warranted based on evidentiary and jury
                              instruction errors18
                              Early in this case, the district court granted FTB partial
                summary judgment and dismissed Hyatt's declaratory relief cause of
                action concerning when he moved from California to Nevada. The district
                court reached this conclusion because the audits were still under review in
                California, and therefore, the Nevada court lacked jurisdiction to address
                whether the audits' conclusions were accurate. The partial summary
                judgment was not challenged by Hyatt at any point to this court, and thus,
                the district court's ruling was in effect throughout the trial. Consequently,
                whether the audits' determinations were correct was not an issue in the
                Nevada litigation.

                      13 Tothe extent FTB argues that it was prejudiced by its inability to
                obtain Hyatt's medical records, we reject this argument as the rulings
                below on this issue specifically allowed FTB to argue to the jury the lack of
                any medical treatment or evidence by Hyatt.

                      18 While  we conclude, as discussed below, that evidentiary and jury
                instruction errors require a new trial as to damages on Hyatt's TIED
                claim, we hold that sufficient evidence supports the jury's finding as to
                liability on this claim regardless of these errors. Thus, these errors do not
                alter our affirmance as to liability on this claim.

SUPREME COURT
        OF
     NEVADA
                                                     48
(0) 1947A
                                 On appeal, FTB argues that the district court erroneously
                    allowed evidence and a jury instruction that went directly to whether the
                    audits were properly determined. FTB frames this issue as whether the
                    district court exceeded thefl case's jurisdictional boundaries, but the issue
                    more accurately involves the admissibility of evidence and whether a jury
                    instruction given by the district court was proper in light of the
                    jurisdictional ruling. We review both the admissibility of evidence and the
                    propriety of jury instructions for an abuse of discretion.    See Hansen v.
                    Universal Health Servs., 115 Nev. 24, 27, 974 P.2d 1158, 1160 (1999)
                    (evidence); Allstate Ins. Co. v. Miller, 125 Nev. 300, 319, 212 P.3d 318, 331
                    (2009) (jury instruction).
                                       Evidence improperly permitted challenging audits'
                                       conclusions
                                FTB argues that the district court violated its jurisdictional
                    restriction governing this case, because by allowing Hyatt's claims to go
                    forward based on the evidence presented at trial, the jury was in effect
                    required to make findings on Hyatt's residency and whether he owed
                    taxes. FTB points to the testimony of a number of Hyatt's witnesses that
                    focused on whether the audits' results were correct: (1) Hyatt's tax
                    accountant and tax attorney, who were his representatives during the
                    audits, testified to their cooperation with FTB and that they did not
                    attempt to intimidate the auditor to refute two bases for the imposition of
                    penalties by FTB for lack of cooperation and intimidation; (2) an expert
                    tax attorney witness testified about Hyatt's representatives' cooperation
                    during the audits to refute the lack of cooperation allegation; (3) an expert
                    witness testified as to the lifestyles of wealthy people to refute the
                    allegation that Hyatt's actions of living in a low-income apartment
                    building in Las Vegas and having no security were "implausible
SUPREME COURT
       OF
    NEVADA
                                                         49
(0) I947A 940)))4
                behaviors"; and especially, (4) expert testimony of former FTB agent
                Malcom Jumulet regarding audit procedures, and Jumulet's testimony as
                to how FTB analyzed and weighed the information obtained throughout
                the audits as challenging the results of the audits reached by FTB.
                Further, FTB points to Hyatt's arguments regarding an alleged
                calculation error as to the amount of taxable income, which FTB argues is
                an explicit example of Hyatt challenging the conclusions of the audits.
                Hyatt argues that all the evidence he presented did not challenge the
                audits, but was proffered to demonstrate that the audits were conducted
                in bad faith and in an attempt to "trump up a case against Hyatt and
                extort a settlement."
                            While much of the evidence presented at trial would not
                violate the restriction against considering the audits' conclusions, there
                are several instances in which the evidence does violate this ruling. These
                instances included evidence challenging whether FTB made a
                mathematical error in the amount of income that it taxed, whether an
                auditor improperly gave credibility to certain interviews of estranged
                family members, whether an auditor appropriately determined that
                certain information was not credible or not relevant, as well as the
                testimony outlined above that Hyatt presented, which challenged various
                aspects of the fraud penalties.
                            The expert testimony regarding the fraud penalties went to
                the audits' determinations and had no utility in showing any intentional
                torts unless it was first concluded that the audits' determinations were
                incorrect. For example, the expert testimony concerning typical lifestyles
                of wealthy individuals had relevance only to show that FTB erroneously
                concluded that Hyatt's conduct, such as renting an apartment in a low-

SUPREME COURT
        OF
     NEVADA

(0) 1947A
                                                    50
                 income complex, was fraudulent because he was wealthy and allegedly
                 only rented the apartment to give the appearance of living in Nevada.
                 Whether such a conclusion was a correct determination by FTB is
                 precisely what this case was not allowed to address. The testimony does
                 not show wrongful intent or bad faith without first concluding that the
                 decisions were wrong, unless it was proven that FTB knew wealthy
                 individuals' tendencies, that they applied to all wealthy individuals, and
                 that FTB ignored them. None of this was established, and thus, the
                 testimony only went to the audits' correctness, which was not allowed.
                 These are instances where the evidence went solely to challenging
                 whether FTB made the right decisions in its audits. As such, it was an
                 abuse of discretion for the district court to permit this evidence to be
                 admitted. Hansen, 115 Nev. at 27, 974 P.2d at 1160.
                                    Jury instruction permitting consideration of audits'
                                    determinations
                             FTB also argues that the district court wrongly instructed the
                 jury. Specifically, it asserts that the jury instruction given at the end of
                 trial demonstrates that the district court allowed the jury to improperly
                 consider FTB's audit determinations. Hyatt counters FTB's argument by
                 relying on an earlier instruction that was given to the jury that he argues
                 shows that the district court did not allow the jury to determine the
                 appropriateness of the audits' results, as it specifically instructed the jury
                 not to consider the audits' conclusions.
                             As background, before trial began, and at various times during
                 the trial, the district court read an instruction to the jury that it was not
                 to consider whether the audits' conclusions were correct:
                                   Although this case arises from the residency
                             tax audit conducted by FTB, it is important for
                             you to understand that you will not be asked, nor
SUPREME COUFtT
      OF
    NEVADA

           e)                                          51
(0) (WA
                              will you be permitted to make any determinations
                              related to Mr. Hyatt's residency or the correctness
                              of the tax assessments, penalties and interest
                              assessed by FTB against Mr. Hyatt. Thus,
                              although you may hear evidence during the course
                              of this trial that may be related to the
                              determinations and conclusions reached by FTB
                              regarding Mr. Hyatt's residency and tax
                              assessments, you are not permitted to make any
                              determinations regarding Mr. Hyatt's residency
                              such as when he became or did not become a
                              resident of Nevada.
                  When jury instructions were given, this instruction was intended to be
                  part of the jury instructions, but somehow the instruction was altered and
                  a different version of this instruction was read as Jury Instruction 24. To
                  correct the error, the district court read a revised Jury Instruction 24:
                                     You have heard evidence during the course
                              of this trial that may be related to the
                              determinations and conclusions reached by FTB
                              regarding Mr. Hyatt's residency and tax
                              assessments. You are not permitted to make any
                              determinations regarding Mr. Hyatt's residency,
                              such as when he became or did not become a
                              resident of Nevada. Likewise, you are not
                              permitted to make any determinations related to
                              the propriety of the tax assessments issued by
                              FTB against Mr. Hyatt, including but not limited
                              to, the correctness or incorrectness of the amount
                              of taxes assessed, or the determinations of FTB to
                              assess Mr. Hyatt penalties and/or interest on
                              those tax assessments.
                                    The residency and tax assessment
                              determinations, and all factual and legal issues
                              related thereto, are the subject matter of a
                              separate administrative process between Mr.
                              Hyatt and FTB in the State of California and will
                              be resolved in that administrative process. You
                              are not to concern yourself with those issues.
SUPREME COURT
        OF
     NEVADA
                                                        52
(0) 1947A    en
                                   Counsel for the FTB read and presented
                             argument from the inaccurate Jury Instruction
                             No. 24. To the extent FTB's counsel's arguments
                             cited and relied on statements that are not
                             contained in the correct Jury Instruction No. 24,
                             they are stricken and you must disregard them.
                             You are not to consider the stricken statements
                             and arguments in your deliberations. There is
                             nothing in the correct Jury Instruction No. 24 that
                             would prevent you during your deliberations from
                             considering the appropriateness or correctness of
                             the analysis conducted by the FTB employees in
                             reaching its residency determination and
                             conclusion. There is nothing in Jury Instruction
                             No. 24 that would prevent Malcolm Jumulet from
                             rendering an opinion about the appropriateness or
                             correctness of the analysis conducted by FTB
                             employees in reaching its residency determinations
                             and conclusions.
                 (Emphasis added.) Based on the italicized language, FTB argues that the
                 district court not only allowed, but invited the jury to consider whether the
                 FTB's audit conclusions were correct.
                             Jury Instruction 24 violated the jurisdictional limit that the
                 district court imposed on this case. The instruction specifically allowed
                 the jury to consider the "appropriateness or correctness of the analysis
                 conducted by the FTB employees in reaching its residency determination
                 and conclusion." As a result, the district court abused its discretion in
                 giving this jury instruction. Allstate Ins. Co., 125 Nev. at 319, 212 P.3d at
                 331.
                                   Exclusion of evidence to rebut adverse inference
                             FTB also challenges the district court's exclusion of evidence
                 that it sought to introduce in an effort to rebut an adverse inference
                 sanction for spoliation of evidence. The evidentiary spoliation arose when
                 FTB changed its e-mail server in 1999, and it subsequently destroyed
SUPREME COURT
        OF
     NEVADA

             e                                        53
(0) (947A
                backup tapes from the old server. Because the server change occurred
                during the pendency of this litigation, FTB sent multiple e-mails to its
                employees, before the change, requesting that they print or otherwise save
                any e-mails related to Hyatt's case. Backup tapes containing several
                weeks' worth of e-mails were made from the old system to be used in the
                event that FTB needed to recover the old system. FTB, at some point,
                overwrote these tapes, however, and Hyatt eventually discovered the
                change in e-mail servers and requested discovery of the backup tapes,
                which had already been deleted. Because FTB had deleted the backup
                tapes, Hyatt filed a pretrial motion requesting sanctions against FTB.
                The district court ruled in Hyatt's favor and determined that it would give
                an adverse inference jury instruction. An adverse inference allows, but
                does not require, the jury to infer that evidence negligently destroyed by a
                party would have been harmful to that party.         See, e.g., Bass-Davis v.
                Davis, 122 Nev. 442, 446, 452, 134 P.3d 103, 106, 109 (2006).
                            At trial, FTB sought to introduce evidence explaining the
                steps it had taken to preserve any relevant e-mails before the server
                change. Hyatt challenged this evidence, arguing that it was merely an
                attempt to reargue the evidence spoliation. The district court agreed with
                Hyatt and excluded the evidence. FTB does not challenge the jury
                instruction, but it does challenge the district court's exclusion of evidence
                that it sought to present at trial to rebut the adverse inference.
                            On this point, FTB argues that it was entitled to rebut the
                adverse inference, and therefore, the district court abused its discretion in
                excluding the rebuttal evidence. Hyatt counters that it is not proper
                evidence because in order to rebut the inference FTB had to show that the

SUPREME COURT
        OF
     NEVADA
                                                      54
(0) 1947A
                  destroyed evidence was not harmful and FTB's excluded evidence did not
                  demonstrate that the destroyed e-mails did not contain anything harmful.
                              This court has recognized that a district court may impose a
                  rebuttable presumption, under NRS 47.250(3), when evidence was
                  willfully destroyed, or the court may impose a permissible adverse
                  inference when the evidence was negligently destroyed.       Bass-Davis, 122
Nev. at 447-48, 134 P.3d at 106-07. Under a rebuttable presumption, the
                  burden shifts to the spoliating party to rebut the presumption by showing
                  that the evidence that was destroyed was not unfavorable. 122 Nev. at
                  448, 134 P.3d at 107. If the party fails to rebut the presumption, then the
                  jury or district court may presume that the evidence was adverse to the
                  party that destroyed the evidence.     Id. A lesser adverse inference, that
                  does not shift the burden of proof, is permissible.   Id. at 449, 134 P.3d at
                  107. The lesser inference merely allows the fact-finder to determine,
                  based on other evidence, that a fact exists. Id.
                              In the present case, the district court concluded that FTB's
                  conduct was negligent, not willful, and therefore the lesser adverse
                  inference applied, and the burden did not shift to FTB. But the district
                  court nonetheless excluded the proposed evidence that FTB sought to
                  admit to rebut the adverse inference. The district court should have
                  permitted FTB to explain the steps that it took to collect the relevant e-
                  mails in an effort to demonstrate that none of the destroyed information
                  contained in the e-mails was damaging to FTB. Because the district court
                  did not allow FTB to explain the steps taken, we are not persuaded by
                  Hyatt's contention that FTB's evidence was actually only an attempt to
                  reargue the spoliation issue. To the contrary, FTB could use the proposed
                  evidence related to its efforts to collect all relevant e-mails to explain why

SUPREME COURT
      OF
    NEVADA
                                                        55
(0) I947A 00e10
                 nothing harmful was destroyed. Therefore, we conclude that the district
                 court abused its discretion in excluding the evidence, and we reverse the
                 district court's ruling in this regard.
                                    Other evidentiary errors
                              FTB additionally challenges the district court's exclusion of
                 evidence regarding Hyatt's loss of his patent through a legal challenge to
                 the validity of his patent and his being audited for his federal taxes by the
                 IRS, both of which occurred during the relevant period associated with
                 Hyatt's TIED claim. Hyatt asserts that the district court properly
                 excluded the evidence because it was more prejudicial than probative.
                              Under NRS 48.035(1), "[al lthough relevant, evidence is not
                 admissible if its probative value is substantially outweighed by the danger
                 of unfair prejudice. . . Hyatt argues that this provides a basis for the
                 district court's exclusion of this evidence. We conclude, however, that the
                 district court abused its discretion in excluding the evidence of Hyatt's
                 patent loss and federal tax audit on this basis. Although the evidence may
                 be prejudicial, it is doubtful that it is unfairly prejudicial as required
                 under the statute. And in any event, the probative value of this evidence
                 as to Hyatt's TIED claim, in particular in regard to damages caused by
                 FTB as opposed to other events in his life, is more probative than unfairly
                 prejudicial. Accordingly, the district court abused its discretion in
                 excluding this evidence.
                                    Evidentiary and jury instruction errors warrant reversal
                                    and remand for a new trial on damages only on the IIED
                                    claim
                              Because the district court abused its discretion in making the
                 evidentiary and jury instruction rulings outlined above, the question
                 becomes whether these errors warrant reversal and remand for a new trial
SUPREME COURT
        OF
     NEVADA

                                                           56
10) 1947A    e
                     on the TIED claim, or whether the errors were harmless such that the
                     judgment on the TIED claim should be upheld. See Cook v. Sunrise Hosp.
                     & Med. Ctr., L.L.C., 124 Nev. 997, 1006, 194 P.3d 1214, 1219 (2008)
                     (holding that when there is error in a jury instruction "prejudice must be
                     established in order to reverse a district court judgment," which can be
                     done by "showing that, but for the error, a different result might have
                     been reached"); El Cortez Hotel, Inc. v. Coburn, 87 Nev. 209, 213, 484 P.2d
1089, 1091 (1971) (stating that an evidentiary error must be prejudicial in
                     order to warrant reversal and remand). We hold that substantial evidence
                     exists to support the jury's finding as to liability against FTB on Hyatt's
                     TIED claim regardless of these errors, but we conclude that the errors
                     significantly affected the jury's determination of appropriate damages, and
                     therefore, these errors were prejudicial and require reversal and remand
                     for a new trial as to damages.
                                 In particular, the record shows that at trial Hyatt argued that
                     FTB promised fairness and impartiality in its auditing processes but then,
                     according to Hyatt, proceeded to conduct unfair audits that amounted to
                     FTB "seeking to trump up a tax claim against him or attempt to extort
                     him." In connection with this argument, Hyatt asserted that the penalties
                     FTB imposed against Hyatt were done "to better bargain for and position
                     the case to settle." Hyatt also argued that FTB unfairly refused to correct
                     a mathematical error in the amount assessed against him when FTB
                     asserted that there was no error.
                                 None of these assertions could be made without contesting the
                     audits' conclusions and determining that they were incorrect, which Hyatt
                     was precluded from doing. Further, excluding FTB's evidence to rebut the
                     adverse inference was prejudicial because Hyatt relied heavily on the

SUPREME COURT
        OF
     NEVADA
                                                         57
(0) 1947A    44Sto
                adverse inference, and it is unknown how much weight the jury gave the
                inference in making its damages findings. The exclusion of evidence
                concerning Hyatt's loss of his patent and his federal tax audit, both
                occurring during the relevant period, relate to whether Hyatt's emotional
                distress was caused by FTB's conduct or one of these other events. As for
                the jury instruction, Instruction 24 gave the jury permission to consider
                the audits' determinations, which the district court had previously
                precluded it from reaching. As such, all of these errors resulted in
                prejudice to FTB directly related to the amount of damages Hyatt may be
                entitled to on his TIED claim. Therefore, a new trial as to the TIED
                damages is warranted.
                                 Recoverable damages on remand
                           As addressed above in regard to damages for Hyatt's fraud
                claim, we reject FTB's argument that it should be entitled to Nevada's
                statutory cap on damages for government entities under comity principles.
                Based on our above analysis on this issue, we conclude that providing
                statutory caps on damages under comity would conflict with our state's
                policy interest in providing adequate redress to Nevada citizens. Thus,
                comity does not require this court to grant FTB such relief.   Faulkner v.
                Univ. of Tenn., 627 So. 2d 362, 366 (Ala. 1992); see also Sam v. Estate of
                Sam, 134 P.3d 761, 765 (N.M. 2006) (recognizing that a state is not
                required to extend immunity and comity, and only dictating doing so if it
                does not contradict the forum state's public policy). As a result, any
                damages awarded on remand for Hyatt's TIED claim are not subject to any
                statutory cap on the amount awarded. As to FTB's challenges concerning
                prejudgment interest in connection with Hyatt's emotional distress
                damages, these arguments are rendered moot by our reversal of the

SUPREME COURT
        OF
     NEVADA

(0) 1947A
                                                   58
                damages awarded for a new trial and our vacating the prejudgment
                interest award.
                Punitive damages
                            The final issue that we must address in FTB's appeal is
                whether Hyatt can recover punitive damages from FTB. The district court
                allowed the issue of punitive damages to go to the jury, and the jury found
                in Hyatt's favor and awarded him $250 million
                            Punitive damages are damages that are intended to punish a
                defendant's wrongful conduct rather than to compensate a plaintiff for his
                or her injuries. Bongiovi v. Sullivan, 122 Nev. 556, 580, 138 P.3d 433, 450
                (2006). But "[t]he general rule is that no punitive damages are allowed
                against a [government entity] unless expressly authorized by statute."
                Long v. City of Charlotte, 293 S.E.2d 101, 114 (N.C. 1982) (emphasis
                added). In Nevada, NRS 41.035(1) provides that "fain award for damages
                [against a government entity] in an action sounding in tort .. . may not
                include any amount as exemplary or punitive." Thus, Nevada has not
                waived its sovereign immunity from suit for such damages.
                            FTB argues that it is entitled to immunity from punitive
                damages based on comity because, like Nevada, California law has
                expressly waived such damages against its government entities.
                California law provides full immunity from punitive damages for its
                government agencies. Cal. Gov't Code § 818 (West 2012). Hyatt
                maintains that punitive damages are available against an out-of-state

SUPREME COURT
         OF
      NEVADA

                                                    59
(0) 1.947A
                      government entity, if provided for by statute, and Nevada has a statute
                      authorizing such damages—NRS 42.005. 19
                                  NRS 42.005(1) provides that punitive damages may be
                      awarded when a defendant "has been guilty of oppression, fraud or malice,
                      express or implied." Hyatt acknowledges that punitive damages under
                      NRS 42.005 are not applicable to a Nevada government entity based on
                      NRS 41.035(1), but he contends that because FTB is not a Nevada
                      government agency, the protection against punitive damages for Nevada
                      agencies under NRS 41.035(1) does not apply, and thus, FTB comes within
                      NRS 42.005's purview. FTB counters by citing a federal district court
                      holding, Georgia v. City of East Ridge, Tennessee, 949 F. Supp. 1571, 1581
                      (N.D. Ga. 1996), in which the court concluded that a Tennessee
                      government entity could not be held liable for punitive damages under
                      Georgia state law (which applied to the case) because, even though
                      Georgia law had a statute allowing punitive damages, Georgia did not
                      allow such damages against government entities. Therefore, the court
                      gave the Tennessee government entity the protection of this law. Id.

                            19 Hyatt also argues that punitive damages are proper because the
                      IRS is subject to punitive damages for conduct similar to that alleged here
                      under the IRS code, 26 U.S.C. § 7431(c)(1)(B)(ii) (2012), which allows for
                      punitive damages for intentional or grossly negligent disclosure of a
                      private taxpayer's information. Thus, Hyatt maintains that it is
                      reasonable to impose punitive damages against FTB when the federal law
                      permits punitive damages against the IRS for similar conduct. Id. But as
                      FTB points out, this argument fails because there is a statute that
                      expressly allows punitive damages against the IRS, and such a statute
                      does not exist here.

SUPREME COURT
        OF
     NEVADA
                                                          60
(0) 194Th    494040
                             The broad allowance for punitive damages under NRS 42.005
                 does not authorize punitive damages against a government entity.
                 Further, under comity principles, we afford FTB the protections of
                 California immunity to the same degree as we would provide immunity to
                 a Nevada government entity as outlined in NRS 41.035(1). Thus, Hyatt's
                 argument that Nevada law provides for the award of punitive damages
                 against FTB is unpersuasive. Because punitive damages would not be
                 available against a Nevada government entity, we hold that under comity
                 principles FTB is immune from punitive damages. We therefore reverse
                 the portion of the district court's judgment awarding punitive damages
                 against FTB.
                 Costs
                             Since we reverse Hyatt's judgments on several of his tort
                 causes of action, we must reverse the district court's costs award and
                 remand the costs issue for the district court to determine which party, if
                 any, is the prevailing party based on our rulings.   See Bower v. Harrah's
                 Laughlin, Inc., 125 Nev. 470, 494-95, 215 P.3d 709, 726 (2009) (stating
                 that the reversal of costs award is required when this court reverses the
                 underlying judgment); Glenbrook Homeowners Ass'n v. Glenbrook Co., 111
Nev. 909, 922, 901 P.2d 132, 141 (1995) (upholding the district court's
                 determination that neither party was a prevailing party because each
                 party won some issues and lost some issues). On remand, if costs are
                 awarded, the district court should consider the proper amount of costs to
                 award, including allocation of costs as to each cause of action and recovery
                 for only the successful causes of action, if possible.      Cf. Mayfield v.
                 Koroghli, 124 Nev. 343, 353, 184 P.3d 362, 369 (2008) (holding that the
                 district court should apportion costs award when there are multiple
                 defendants, unless it is "rendered impracticable by the interrelationship of
SUPREME COURT
            OF
      NEVADA
                                                      61
(0) 1947.
                  the claims"); Bergmann v. Boyce, 109 Nev. 670, 675-76, 856 P.2d 560, 563
                  (1993) (holding that the district court should apportion attorney fees
                  between causes of action that were colorable and those that were
                  groundless and award attorney fees for the groundless claims).
                              Because this issue is remanded to the district court, we also
                  address FTB's challenges on appeal to the procedure used by the district
                  court in awarding costs. Hyatt moved for costs after trial, which FTB
                  opposed. FTB's opposition revolved in part around its contention that
                  Hyatt failed to properly support his request for costs with necessary
                  documentation as to the costs incurred. The district court assigned the
                  costs issue to a special master. During the process, Hyatt supplemented
                  his request for costs on more than one occasion to provide additional
                  documentation to support his claimed costs. After approximately 15
                  months of discovery, the special master issued a recommendation to award
                  Hyatt approximately $2.5 million in costs. FTB sought to challenge the
                  special master's recommendation, but the district court concluded that
                  FTB could not challenge the recommendation under the process used, and
                  the court ultimately adopted the special master's recommendation.
                              FTB argues that Hyatt was improperly allowed to submit,
                  under NRS 18.110, documentation to support the costs he sought after the
                  deadline. This court has previously held that the five-day time limit
                  established for filing a memorandum for costs is not jurisdictional because
                  the statute specifically allows for "such further time as the court or judge
                  may grant" to file the costs memorandum. Eberle v. State ex rel. Nell J.
                  Redfield Trust, 108 Nev. 587, 590, 836 P.2d 67, 69 (1992). In Eberle, this
                  court stated that even if no extension of time was granted by the district
                  court, the fact that it favorably awarded the costs requested demonstrated

SUPREME COURT
        OF
     NEVADA
                                                       62
(0) 1947A    en
                that it impliedly granted additional time. Id. The Eberle court ruled that
                this was within the district court's discretion and would not be disturbed
                on appeal. Id. Based on the Eberle holding, we reject FTB's contention
                that Hyatt was improperly allowed to supplement his costs memorandum
                             FTB also contends that the district court erred when it refused
                to let FTB file an objection to the master's report and recommendation.
                The district court concluded that, under NRCP 53(e)(3), no challenge was
                permitted because there was a jury trial. While the district court could
                refer the matter to a special master, the district court erroneously
                determined that FTB was not entitled to file an objection to the special
                master's recommendation. Although this case was a jury trial, the costs
                issue was not placed before the jury. Therefore, NRCP 53(e)(2) applied to
                the costs issue, not NRCP 53(e)(3). NRCP 53(e)(2) specifically provides
                that "any party may serve written objections" to the master's report.
                Accordingly, the district court erred when it precluded FTB from filing its
                objections. On remand, if the district court concludes that Hyatt is still
                entitled to costs, the court must allow FTB to file its objections to the
                report before the court enters a cost award. Based on our reversal and
                remand of the costs award, and our ruling in this appeal, we do not
                address FTB's specific challenges to the costs awarded to Hyatt, as those
                issues should be addressed by the district court, if necessary, in the first
                instance.
                Hyatt's cross-appeal
                            The final issues that we must resolve concern Hyatt's cross-
                appeal. In his cross-appeal, Hyatt challenges the district court's summary
                judgment ruling that prevented him from seeking economic damages as
                part of his recovery for his intentional tort claims.

SUPREME COURT
        OF
     NEVADA
                                                       63
(0) I947A
                           As background, during the first audit, FTB sent letters to two
                Japanese companies with whom Hyatt had patent-licensing agreements
                asking the companies for specific dates when any payments were sent to
                Hyatt. Both companies responded to the letters and provided the
                requested information. In the district court, Hyatt argued that sending
                these letters to the Japanese companies was improper because they
                revealed that Hyatt was being audited by FTB and that he had disclosed
                the licensing agreements to FTB. Hyatt theorized that he suffered
                economic damages by losing millions of dollars of potential licensing
                revenue because he alleges that the Japanese market effectively
                abandoned him based on the disclosures. FTB moved the district court for
                summary judgment to preclude Hyatt from seeking economic loss
                damages, arguing that Hyatt did not have sufficient evidence to present
                this claim for damages to the jury. The district court agreed and granted
                FTB summary judgment.
                            Damages "cannot be based solely upon possibilities and
                speculative testimony."   United Exposition Serv. Co. v. State Indus. Ins.
                Sys., 109 Nev. 421, 424, 851 P.2d 423, 425 (1993). This is true regardless
                of 'whether the testimony comes from the mouth of a lay witness or an
                expert." Gramanz v. T-Shirts & Souvenirs, Inc., 111 Nev. 478, 485, 894
P.2d 342, 347 (1995) (quoting Advent Sys. Ltd. v. Unisys Corp.,   925 F.2d
670, 682 (3d Cir. 1991)). When circumstantial evidence is used to prove a
                fact, "the circumstances must be proved, and not themselves be
                presumed." Horgan v. Indart, 41 Nev. 228, 231, 168 P. 953, 953 (1917); see
                also Frantz v. Johnson, 116 Nev. 455, 468, 999 P.2d 351, 359 (2000). A
                party cannot use one inference to support another inference; only the
                ultimate fact can be presumed based on actual proof of the other facts in

SUPREME COURT
         OF
      NEVADA
                                                    64
(0) 1.9474
                the chain of proof.    Horgan, 41 Nev. at 231, 168 P. at 953. Thus, "a
                complete chain of circumstances must be proven, and not left to inference,
                from which the ultimate fact may be presumed." Id.
                             Here, Hyatt argued that as a result of FTB sending letters to
                the two Japanese companies inquiring about licensing payments, the
                companies in turn would have notified the Japanese government about
                FTB investigating Hyatt. Hyatt theorized that the Japanese government
                would then notify other Japanese businesses about Hyatt being under
                investigation, with the end result being that the companies would not
                conduct any further licensing business with Hyatt. Hyatt's evidence to
                support this alleged chain of events consisted of the two letters FTB sent
                to the two companies and the fact that the companies responded to the
                letters, the fact that his licensing business did not obtain any other
                licensing agreements after the letters were sent, and expert testimony
                regarding Japanese business culture that was proffered to establish this
                potential series of events.
                             Hyatt claims that the district court erroneously ruled that he
                had to present direct evidence to support his claim for damages, e.g.,
                evidence that the alleged chain of events actually occurred and that other
                companies in fact refused to do business with Hyatt as a result. Hyatt
                insists that he had sufficient circumstantial evidence to support his
                damages, and in any case, asserts that circumstantial evidence alone is
                sufficient and that causation requirements are less stringent and can be
                met through expert testimony under the circumstances at issue here. FTB
                responds that the district court did not rule that direct evidence was

SUPREME COURT
        OF
     NEVADA
                                                     65
(0) I947A
                required, but instead concluded that Hyatt's evidence was speculative and
                insufficient. FTB does not contest that damages can be proven through
                circumstantial evidence, but argues that Hyatt did not provide such
                evidence. It also argues that there is no different causation standard
                under the facts of this case.
                             The issue we must decide is whether Hyatt set forth sufficient
                circumstantial evidence to support his economic damages claim, or if the
                evidence he presented was instead either too speculative or failed to create
                a sufficient question of material fact as to his economic damages. To begin
                with, we reject Hyatt's contention that reversal is necessary because the
                district court improperly ruled that direct evidence was mandatory.
                Hyatt's limited view of the district court's ruling is unavailing.
                             The ultimate fact that Hyatt seeks to establish through
                circumstantial evidence, that the downfall of his licensing business in
                Japan resulted from FTB contacting the two Japanese companies,
                however, cannot be proven through reliance on multiple inferences—the
                other facts in the chain must be proven. Here, Hyatt only set forth expert
                testimony detailing what his experts believed would happen based on the
                Japanese business culture. No evidence established that any of the
                hypothetical steps actually occurred. Hyatt provided no proof that the two
                businesses that received FTB's letters contacted the Japanese
                government, nor did Hyatt prove that the Japanese government in turn
                contacted other businesses regarding the investigation of Hyatt.
                Therefore, Hyatt did not properly support his claim for economic damages
                with circumstantial evidence. Wood v. Safeway, Inc., 121 Nev. 724, 731,
                121 P.3d 1026, 1030-31 (2005) (recognizing that to avoid summary
                judgment once the movant has properly supported the summary judgment

SUPREME COURT
       OF
    NEVADA
                                                      66
0) 1947A
                motion, the nonmoving party may not rest upon general allegations and
                conclusions, but must instead set forth by affidavit or otherwise specific
                facts demonstrating the existence of a genuine issue of material fact for
                trial); see NRCP 56(e). Accordingly, summary judgment was proper and
                we affirm the district court's summary judgment on this issue.
                                              CONCLUSION
                            Discretionary-function immunity does not apply to intentional
                and bad-faith tort claims. But while FTB is not entitled to immunity, it is
                entitled to judgment as a matter of law on each of Hyatt's causes of action
                except for his fraud and TIED claims. As to the fraud claim, we affirm the
                district court's judgment in Hyatt's favor, and we conclude that the district
                court's evidentiary and jury instruction errors were harmless. We also
                uphold the amount of damages awarded, as we have determined that FTB
                is not entitled to a statutory cap on damages under comity principles
                because this state's interest in providing adequate relief to its citizens
                outweighs providing FTB with the benefit of a damage cap under comity.
                In regard to the TIED claim, we affirm the judgment in favor of Hyatt as to
                liability, but conclude that evidentiary and jury instruction errors require
                a new trial as to damages. Any damages awarded on remand are not
                subject to a statutory cap under comity. We nevertheless hold that Hyatt
                is precluded from recovering punitive damages against FTB. The district
                court's judgment is therefore affirmed in part and reversed and remanded
                in part. We also remand the prejudgment interest and the costs awards to
                the district court for a new determination in light of this opinion. Finally,
                we affirm the district court's prior summary judgment as to Hyatt's claim

SUPREME COURT
       OF
    NEVADA
                                                     67
(0) 947A    e
                for economic damages on Hyatt's cross-appeal. Given our resolution of
                this appeal, we do not need to address the remaining arguments raised by
                the parties on appeal or cross-appeal.

                                                                      tot\
                                                           Hardesty

                               h C
                                OMA          , C.J.
                Gibbons

                     sJw
                Pickering

                -   raA it
                Parraguirre

                                                J.

SUPREME COURT
        OF
     NEVADA
                                                      68
(0) 1947A