LEIGH-PINK v. RIO PROPERTIES, LLC (NRAP 5) , 2022 NV 48 ( 2022 )

138 Nev., Advance Opinion Ug
IN THE SUPREME COURT OF THE STATE OF NEVADA
AARON LEIGH-PINK; AND TANA | No. 82572
EMERSON, .
Appellants,
FILED ©
RIO PROPERTIES, LLC, | - S
Respondent. JUN 30 2022
| EL in Bee
By IEF SoBUTY CLERK
Certified question under NRAP 5 concerning the scope of
damages under common-law fraudulent concealment and _ statutory
consumer fraud claims. United States Court of Appeals for the Ninth
Circuit; Ronald M. Gould and Ryan D. Nelson, Circuit Judges, and Brian
M. Cogan, District Judge.!
Question answered.
Law Office of Robert A. Waller, Jr., and Robert A. Waller, Jr., Cardiff-by-
the-Sea, California,
fer Appellants,
Cozen O’Connor and Richard Fama, New York, New York; Cozen O’Connor
and F. Brenden Coller, Philadelphia, Pennsylvania; Cozen O'Connor and
Karl O. Riley, Las Vegas; Lemons, Grundy & Eisenberg and Robert L.
Eisenberg, Reno,
for Respondent.
Gesund & Pailet, LLC, and Keren E. Gesund, Las Vezas,
for Amici Curiae Public Citizen, National Association of Consumer
Advocates, National Consumer Law Center, and Public Justice.
'The Honorable Brian M. Cogan. United States District Judge for the
Eastern District of New York, sitting by designation.
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Jones Lovelock and Stephen A. Davis and Marta D. Kurshumova, Las
Vegas,
for Amicus Curiae Legal Aid Center of Southern Nevada, Inc.
BEFORE THE SUPREME COURT, EN BANC.
OPINION
By the Court, STIGLICH, J.:
This case comes to us as a certified question under NRAP 5 from
the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit
asks us to determine whether a plaintiff has suffered damages for purposes
of common-law fraudulent concealment and NRS 41.600 consumer fraud
claims if the defendant’s actions caused the plaintiff to purchase a product
or service the plaintiff would otherwise not have purchased, even if that
product or service’s value was at least equal to what the plaintiff paid.
In this opinion, we conclude that a plaintiff who receives the
true value of the goods or services purchased has not suffered damages
under theories of common-law fraudulent concealment or NRS 41.600.
BACKGROUND
We accept the facts of the underlying case as stated in the
certification order. See In re Fontainebleau Las Vegas Holdings, LLC, 127
Nev. 941, 956, 267 P.3d 786, 795 (2011). Appellants Aaron Leigh-Pink and
Tana Emerson stayed at respondent Rio Properties, LLC’s Ric All-Suite
Hotel & Casino in 2017. The Rio comped appellants’ rcom costs but charged
appellants a daily $34 resort fee to access telephones, computers, and the
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fitness room.2 Although the Rio had previously received a letter from the
Southern Nevada Health District informing it that two guests had
contracted Legionnaires’ disease and informed past guests of the
contamination, the Rio did not share this information with incoming guests,
including appellants.
Asserting that they should have been informed of the potential
for exposure, appellants brought a class action lawsuit in Clark County
District Court, alleging, as relevant here, fraudulent concealment and
consumer fraud claims under NRS 41.600. Appellants did not contract
Legionnaires’ disease, nor did the legionella bacteria impede their access to
the phones, computers, or fitness room included in the resort fees; instead,
they based their claims on the Rio’s failure to disclose the presence of the
legionella bacteria and sought to recover their resort fees. The matter was
removed to federal court. The federal district court dismissed the action,
determining that the appellants suffered no damages. It concluded that the
resort fees did not amount to damages because appellants received access
to the amenities the fees covered and thus had received the “benefit of their
bargain.” Ames v. Caesars Entm’t Corp., No.: 2:17-cev-02916-GMN-VCF,
2019 WL 11794277, at *2 (D. Nev. Nov. 26, 2019) Ginternal quotation marks
omitted).
Appellants thereafter appealed to the Ninth Circuit, contending
inter alia that they would not have stayed at the Rio—and would not have
paid the resort fee—had the Rio disciosed the legionella outbreak. The
Ninth Circuit reversed in part and affirmed in part the district court’s
dismissal of claims. See Leigh-Pink v. Rio Props., LLC, 849 Fed App’x 628
2The precise amount appellants paid per day in resort fees was
$34.01.
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DISCUSSION
We decline to rephrase the certified question
As a factual matter, the Ninth Circuit determined that
appellants received the true value of their resort fees. Appellarits challenge
this deterraination, arguing that the certified question should be rephrased
to take into account their position that they did not in fact receive the true
value of their fees, i.e., that the value of the amenities covered by their daily
resort fee in. a hotel containing legionella bacteria was less than $34. The
Rio contends that the scope of the certified question is limited to those
scenarios in which the product or service received “was not worth Jess than
what the plaintiff paid.”
' This court “is hmited to answering the questicns of law posed”
by the certifying court. Progressive Gulf Ins. Co. v. Faehnrich; 130 Nev. 167,
170, 327 P.8d 1061, 1063 (2014) Gnternal quotation marks omitted). of
certified question permits this court to answer “questions ctf law ot this state
which may be determinative of the cause then pending in the certifying
court.” NRAP 5(a); SFR Invs. Pool i, LLC v. Bank of N.Y. Mellon, 134 Nev.
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483, 489 n.5. 422 P.3d 1248, 1253 n.5 (2018). This court has the discretion
to rephrase a certified question. Echeverria v. State, 137 Nev., Adv. Op. 49,
495 P.3d 471, 474 (2021). oe .
In Echeverria, the federal district court certified a question to
this court to consider whether Nevada had waived its sovereign immunity
from damages liability under federal or state law in a minimum wage action
by enacting NRS 41.031(1). Id. This court elected to rephrase the certified
question to remove the consideration of waiver as it related to state law
because the plaintiffs’ state-law claims had already been dismissed by the
certifying court. Id. at 475. Neglecting to do so, this court concluded, wouid
have violated the prohibition against issuing advisory opinions. See id.; see
also Capanna v. Orth, 134 Nev. 888, 897, 432 P.3d 726, 735 (2018) (noting
that this court does not have the power to render adviscry opinions).
We decline to restate the certified question as appellants
request because doing so would impreperly go beyond “answering the
questions of law posed” by the Ninth Circuit. See Progressive Guly, 130 Nev.
at 170, 327 P.3d at 1063.* Appellants challenge the Ninth Circuit’s factual
determination, which we are bound to accept. See In re Fontainebleau, 127
Nev. at 956, 267 P.3d at 795. Furthermore, appellants have not established
that our consideration of the certified question as framed by the Ninth
Circuit poses any risk of rendering an advisory opinion. See Echeverria, 137
Nev., Adv. Op. 49, 495 P.3d et 475. We thus move on to addressing the
certified question as posed by the Ninth Circuit.
3Appellants also argue that they should receive relief for unjust
enrichment. We do not consider this claim, as it is beyond the scope of the
certified question. : :
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A plaintiff has not been damaged for purposes of common-law fraudulent
concealment or consumer fraud under NRS 41.600 when they received the
true value of the goods or services they purchased
Common-law fraudulent concealment
We first consider the common-law portion of the certified
question: whether a fraudulent concealment claim can be sustained where
a plaintiff has received the true value of the goods or services purchased.
Appellants present no argument in support of answering this portion in the
affirmative. The Rio maintains that this court should respond in the
negative because the act of concealment and a showing of damages are
separate elements of a fraudulent concealment claim under the common
law. Therefore, the Rio contends that a plaintiff seeking to recover under a
theory of common-law fraudulent concealment must show not only that a
defendant concealed a material fact but also that this act caused the
plaintiff cognizable damages.
A plaintiff must demonstrate five elements to establish a prima
facie case of fraudulent concealment under Nevada law:
(1) the defendant concealed or suppressed a
material fact; (2) the defendant was under a duty to
disclose the fact to the plaintiff; (3) the defendant
intentionally concealed or suppressed the fact with
the intent to defraud the plaintiff; that is, the
defendant concealed or suppressed the fact for the
purpose of inducing the plaintiff to act differently
than she would have if she had known the fact;
(4) the plaintiff was unaware of the fact and would
have acted differently if she had known of the
concealed or suppressed fact: (5) and, as a result of
the concealment or suppression of the faci, the
plaintiff sustained damages.
Dow Chem. Co. v. Mahlum, 114 Nev. 1468, 1485, 970 P.2d 98. 110 (1998),
overruled in part on other grounds by GES, Inc. v. Corbitt, 117 Nev. 265, 21
P.3d 11 (2001). This court has explained that
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The measure of damages for frauculent
misrepresentation can be determined in one of two
ways. The first allows the defrauded party to
recover the benetit-of-his-bargain, that is, the value
of what he would have if the representations were
true, less what he had received. The second allows
the defrauded party to recover only what he has lost
out-of-pocket, that is, the difference between what
he gave and what he actually received.
Randone v. Turk, 86 Nev. 123. 130, 466 P.2d 218, 222-23 (1970) Gnternal
quotation marks omitted); accord Collins v. Burns, 1038 Nev. 394, 398-99,
741 P.2d 819, 822 (1987).4
In Collins. a family-cened business misrepresented its
profitability to prospective purchasers. 103 Nev. at 396-97, 741 P.2d at 820-
a 2°. The purchasers, relying on the information provided by the family,
beught the business only to find out that the figures they reviewed were
vrossly inflated. Id. at 396, 741 P.2d at 820. The purchasers alleged that
és tne family had fraudulently misrepresented the business's finances. Id.i This court determined that the purchasers were entitled to damages
equaling their out-of-pocket expenses: “the differenée between the amount
they paid to the respondents and the actuai value of the business at the
time of the sale.” Jd. at 399, 741 P.2d at 822.
- This court also’ considered a fraudulent coneealment claim in
Hanneman v. Downer, 110 Nev. 167, 871 P.2d 279 (1994). ‘There. the
defendant sold her home to the plaintiffs, who later discovered that over
four acres of the property belcnged-to the federal governinent. Id. at 171,
‘Nevada law treats fraudulent concealment claims similariy to
fraudulent misrepresentation claims. See Poole vu. Nev. Auio Dealership
Invs., LLC, 135 Nev. 280, 288 n.3, 449 P.2d 479, 485 u.3 (Ct. App. 2019)
(holding “that failure to disclose a fact’ is equivalent to affirmative
representation of that fact’s nonexistence”).
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871 P.2d at 281. The plaintiffs sued the defendant for, among other claims,
fraudulent misrepresentation. Id. at 171, 871 P.2d at 282. This court
determined that the plaintiffs were entitled to out-of-pocket damages that
reflected the difference in the value’ of the property that the plaintiffs
received (i.e., the relative worth of the portion of the land not owned by the
federal government) when subtracted from the value of the property as it
was represented to them. Jd. at 172-73, 871 P.2d at 283.
Other state high courts have held that a plaintiff bringing a
fraudulent concealment claiin must demonstrate cognizable damages. In
Small v. Lorillard Tobacco Co., 720 N.E.2d 892 (N.Y. 1999), New York’s
highest court held that “an act of deception, entirely independent or
separate from any injury, is not sufficient to state a cause of action under a
theory of fraudulent concealment.”® Id. at 898. The consumers in Small
alleged they would not have bought cigarettes had they known that nicotine
was highly addictive. Id. However, they did not attempt te recover damages
for health issues that they may have incurred as a result of their addiction
to cigarettes. Id, They only sought to recover the price they paid for the
cigarettes, which the court rejected as an unavailing “deception as injury”
theory. Id.
Brzoska v. Olson stands for a similar proposition as Small.
Brzoska involved dental patients who asserted claims of fraudulent
misrepresentation against the estate of their former dentist who concealed
his HIV-positive status. 668 A.2d 1355 (Del. 1995). These patients sought
damages for, inter alia, reimbursement of the fees they paid to the dentist.
“The Small court also rejected the consumers’ deceptive trade practice
claim under New York’s analog to the Nevada Deceptive Trade Practices
Act (NDTPA) because they were not able to demonstrate actual] or pecuniary
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Id. at 1359. None of the patients contracted the HIV virus. Id. at 1367.
The Delaware Supreme Court noted that recovery tor fraudulent
misrepresentation is limited to “those damages which are the direct and
proximate result of the false representation consisting of the loss of bargain
or actual out of pocket losses.” Jd. Since the plaintiffs could not
demonstrate they were injured by the dentist’s health status and because
there was no showing that the dentist performed dental services on the
plaintiffs in a deficient manner, the Brzoska court determined that the
plaintiffs did not suffer any compensable damages. Id.This survey of caselaw is clear: a common-law fraudulent
concealment claim requires a plaintiff to demonstrate that they either did
not receive the benefit of the bargain or show out-of-pocket losses caused by
the defendant’s alleged misrepresentation. See id.; Hanneman, 110 Nev. at
172-73, 871 P.2d at 283; Collins, 103 Nev. at 399, 741 P.2d at 822; Small,
720 N.E.2d at 898. An act of concealment does not, in and of itself, lead to
a cognizable injury under the common jaw; instead, a corresponding
showing that such concealment caused the plaintiff cognizable damages is
required. See Dow Chem., 114 Nev. at 1485, 970 P.2d at 110 (establishing
that the plaintiff must demonstrate that they sustained damages “as a
result of the concealment or suppression” (emphasis added)); see clso Small,
720 N.E.2d at 898 (similar). Where a plaintiff received the value of their
purchase, we conclude that they cannot demonstrate that they did not
receive the benefit of their bargain or show any out-of-pocket losses, because
the value of the goods or services they received is equal to the value that
they paid. See Randono, 86 Nev. at 130, 466 P.2d at 222-23; see also
Brzoska, 668 A.2d at 1367 (determining that the plaintiffs’ claim failed
because they could not demonstrate that the defendant performed deficient
services). Here, because appellants received the full value of the amenities
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covered by their resort fee, they did not suffer any damages. We therefore
answer this part of the certified question in the negative.
Consumer fraud under NRS 41.600
Having answered the common-law portion of the certified
question, we now consider whether a consumer fraud claim under NRS
41.600 may be sustained where a party has received the true value of the
goods they purchased. We conclude that the party may not, for the reasons
that. follow.
This court first locks to the plain language of a statute when
interpreting a statutory provision. Clay v. Fighth Judicial Dist. Court, 129
Nev. 445, 451, 305 P.3d 898, 902 (2013). “When presented with a question
of statutory interpretation. the intent of the legislature is the controlling
factor....” Robert E. v. Justice Court, 99 Nev. 443, 445, 664 P.2d 957, 959
(1983). Where a statute is unambiguous, the court does not go beyond its
plain language to divine legislative intent. Jd.
NRS 41.600(1) provides a cause of action to victims of consumer
fraud. lt defines a deceptive trade practice as outlined in the NDTPA,
codified in NRS Chapter 598, as one type of consumer fraud. ' NRS
41.600(2)(e). A person who knowingly fails to disclose a material fact
related to the sale of a good or service has engaged in a deceptive trade
practice. NRS 598.6923(1)(b). In a consumer fraud action, “ (]f the claimant
is the prevailing party, the court shall award the claimant... Ja]ny
damages that the claimant has sustained.” NRS 41.600{3)(a). |
The plain language of NRS 41.600(3)(a) counsels this court to
conclude that’a plaintiff who has suffered no injury has not been damaged
under ihe statute. Cf Clay, 129 Nev. at 451, 305 P.3d at 902. NRS
41,600(3a) permits a plaintiff te recover any’ damages they have
“sustained.” ‘To “sustain,” as in a-harm, is “[tlo undergo; suffer.” Sustain,
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Black’s Law Dictionary (11th ed. 2019). The United States Supreme Court
has defined damages as “the compensation which the law will award for an
injury done.” Scott v. Donald, 165 U.S. 58, 86 (1897). Combining these
definitions, NRS 41.600(3)(a) permits the plaintiff to recover, compensation
for the injuries they have suffered as a result of the defendant’s conduct.
Where, as here, the plaintiffs assert only economic injury but have received
the true value of their goods or services, we determine that the plaintiffs
have not been injured and thus have not “sustained” any damages by the
defendant’s conduct under NRS 41.600(3)(a).
Our reading of NRS 41.600(3)(a) also has the salutary purpose
of coupling the statutory consumer fraud understanding of damages with
this court's determination of damages at common law. See Samantar v.
Yousuf, 560 U.S. 305, 320 (2010) (“The canon of construction that statutes
should be interpreted consistently with the common law helps us interpret
a statute that clearly covers a field formerly governed by the common law.”)
To be sure, “[s]tatutory offenses that sound in fraud are separate and
distinct from common law fraud.” Betsinger v. D.R. Horton, Inc., 126 Nev.
162, 166, 232 P.3d 433, 436 (2010). And “the NDTPA is a remedial statutory
scheme” that should be afforded a liberal construction. See Poole, 135 Nev.
at 286-87, 449 P.3d at 485: Welfare Div. of State Dep’t of Health, Welfare &
Rehab. v. Washoe Cty. Welfare Dep't, 88 Nev. 635, 637, 503 P.2d 457, 458
(1972). But such a hberal construction must be faithful to the first
principles of statutory interpretation. And so where, as here, the plain
language of a statutory term is in accord with the term's definition at
common law, we elect to interpret them similarly.
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WL 5848095 (D. Nev. Sept. 30, 2020). While Cruz is merely persuasive,
rather than binding authority, we take this opportunity to consider it here.
Cf. Lagares v. Camdenton R-II Sch. Dist., 68 S.W.3d 518, 528 (Mo. Ct. App.
2001) (determining that federal cases interpreting Missouri law are
persuasive); Stanley v. Reef Sec., Inc., 314 S.W.3d 659, 667 n.4 (Tex. App.
2010) (affirming the same proposition under Texas law).
Cruz held that a plaintiffs claim under NRS 41.600 may
survive a motion to dismiss even when they received the true value of the
goods they purchased. 2020 WL 5848095, at *5. The plaintiff in Cruz
alleged that Kate Spade listed items on sale, when in actuality the items
were never sold for the reference price listed on the clothing tags. Id. The
plaintiff contended “that she did not get the deal she thought she was
getting” and that she would not have purchased the items if she had “known
their true market value.” Id. at *1. However, the plaintiff did not allege
that the items she purchased were worth less than what she paid. Id. at *5.
The district court determined that the plaintiff had sufficiently alleged
harm to survive a motion to dismiss because the plaintiff “alleged she would
not have purchased the items but for the reference pricing.” Jd. It further
noted that a consumer does not have to allege that “her items are worth less
than what she paid for them... to survive a motion to dismiss.” Jd.
Cruz is not on point. It did not analyze NRS 41.600(3)(a) and
merely relied on NRS 41.600(1)’s classification of a “victim” to reach its
holding. See Cruz, 2020 WL 5848095, at *5. Cruz therefore did not consider
the meaning of “sustained” and “damages” as used in NRS 41.660(3)(a), and
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WAAR Kw Od. pAc.act, J.
Parraguirre Hardesty
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6Many other jurisdictions have understood their analogs to the
NDTPA similarly. See, e.g., Rule v. Fort Dodge Animal Health, Inc., 607
F.3d 250, 253 (1st Cir. 2010) (concluding that a consumer was not damaged
under Massachusetts law where she could not demonstrate economic
damages); Mewhinney v. London Wineman, Inc., 339 S.W.3d 177, 181 (Tex.
App. 2011) (establishing that the appropriate measure of damages under
Texas’s analog to the NDTPA is “the difference between the amount the
company paid and the value it received”).
13