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Nevada’s highest court considers a $3 million jury verdict against a lender who identified the wrong home for foreclosure, causing the lender to improperly enter the home and dispose of the owners’ possessions.
Gerald and Katrina Thitchener (“Owners”) owned a condominium in Las Vegas and the mortgage for the property was with Countrywide Home Loans, Inc. (“Lender”). One of the Owners was a member of the National Guard and he was deployed to Arizona in 2002. The whole family temporarily moved to Arizona during the time of deployment. The Owners continued to pay for their utilities and their assessments for the Las Vegas property.
The Owners fell behind on their mortgage payments in May 2002, causing the Lender to threaten them with foreclosure. The Lender also forwarded the matter to the Lender’s foreclosure division to conduct a preliminary assessment of the unit. However, the Owners cured the default in June 2002 before the commencement of foreclosure proceedings.
A few days after the Owners cured their default, the Lender initiated foreclosure proceedings against another unit in the same complex as the Owners’ condominium. The Lender’s foreclosure division confused the two units, and hired real estate salesperson James Standley (“Standley”) to prepare the Owners’ unit for resale following the completion of the foreclosure proceedings.
As he was preparing the property for resale, Standley became concerned that he was prepping the wrong unit and he questioned the Lender about this. Standley had discovered that the Owners were current on their payments to the homeowners’ association and for the utilities. Upon receiving confirmation from the Lender that this was indeed the right unit, Standley changed all of the utilities into his name and hired someone to remove all of the Owners’ possessions from the unit.
In April 2003, the Owners discovered that the utilities were now in Standley’s name. Around this same time, the Lender discovered that it had prepared the wrong unit for resale. The Owners tried to contact the Lender about their unit, but did not receive any reply. They returned to Las Vegas in August 2003 to find their unit empty.
The Owners filed a lawsuit against the Lender for breach of contract, trespass, conversion, and other claims for damages. A jury trial was held and the jury entered a verdict for $4.5 million, including $2.5 million in punitive damages. The trial court reduced the punitive damages but otherwise affirmed the rest of the jury’s award, resulting in a $3 million verdict against the Lender. The Lender appealed.
The Supreme Court of Nevada reduced the trial court’s award but affirmed an award to the Owners. The jury had awarded the Owners $300,000 for three different causes of action: trespass and conversion; breach of contract; and negligence. The Lender argued that these awards were duplicative, and so caused the Owners to receive more in compensatory damages than their actual losses. The court agreed, finding that the Owners were entitled to only one award for the loss of their possessions. Thus, the court eliminated the jury awards for negligence and breach of contract.
The court also determined that the trial court had improperly trebled the award for trespass and conversion. The statute contains a provision allowing for trebling of damages for unlawful or forcible entry onto the property; however, this provision only applied to damages to real property and not personal property. The count eliminated the treble damage award.
Finally, the court considered the punitive damages. Punitive damages are available when a defendant acts with extreme disregard of another’s rights. The trial court had reduced the jury’s $2.5 million award to $968,070, representing triple the amount of the trespass and conversion damages. While there is no precise formula for determining the appropriate amount of punitive damages, generally these damages must have some relation to the actual damages suffered by the parties. The court agreed that punitive damages were appropriate in this case, as the Lender had ignored multiple warning signs that they might be foreclosing on the wrong property. Therefore, the court affirmed the punitive damage award because the award was in proportion to the actual damages.
Countrywide Home Loans, Inc., v. Thitchener, 192 P.3d 243 (Nev. 2008).