PHWLV, LLC v. HOUSE OF CB USA, LLC , 140 Nev. Adv. Op. No. 53 ( 2024 )

140 Nev., Advance Opinion 53IN THE SUPREME COURT OF THE STATE OF NEVADA
PHWLV, LLC, D/B/A PLANET No. 85413
HOLLYWOOD RESORT AND CASINO,
A/K/A PLANET HOLLYWOOD LAS
VEGAS RESORT AND CASINO,
Appellant, FILED
vs.
HOUSE OF CB USA, LLC: AND AUG 2 2 2G2L
CHINESE LAUNDRY LIFESTYLE, ELI B H A. BRCA.
CLER UP ME C
LLC,
EF DEPUTY CLERK
Respondents.
Appeal from a judgment and post-judgment orders after a jury
trial in a tort action for property damage. Eighth Judicial District Court,
Clark County; Joanna Kishner, Judge.
Reversed i,n part, vacated in part, and remanded.
Lemons, Grundy & Eisenberg and Robert L. Eisenberg, Reno; Wood, Smith,
Henning & Berman and Joel D. Odou and Susana Santana, Las Vegas,
for Appellant PHWLV, LLC.
Marquis Aurbach Chtd. and Christian T. Balducci and Jordan W. Montet,
Las Vegas,
for Respondent House of CB USA, LLC.
Marquiz Law Office, P.C., and Craig A. Marquiz, Henderson,
for Respondent Chinese Laundry Lifestyle, LLC.
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BEFORE THE SUPREME COURT, HERNDON, LEE, and BELL, JJ.
OPINION
By the Court, HERNDON, J.:
This appeal requires us to consider the duty owed by a
commercial property owner to tenants in that commercial property,
specifically with respect to the maintenance of the property owner's internal
fire-suppression system and the property owner's response to issues arising
from a failure within that system. Appellant PHWLV, LLC. operates Planet
Hollywood Resort and Casino and the Miracle Mile Shops in Las Vegas.
Respondents, retailers House of CB USA, LLC, and Chinese Laundry
Lifestyle, LLC, leased commercial space at the Miracle Mile Shops. After
sustaining damage to their stores and inventories when a water pipe in
PHWLV's fire-suppression system burst, the retailers sued PHWLV for
negligence in maintaining the fire-suppression system. Before trial, the
district court granted partial summary judgment on the elements of duty
and breach, concluding that property owners have a duty to prevent items
on their property from damaging another's property, which duty PHWLV
had breached. The case proceeded to a jury trial solely on causation and
darnages, and the jury ultimately returned a verdict in favor of the retailers.
We conclude that the district court erred in its formulation of
PHWLV's duty at the summary-judgment stage. Under the facts of this
case, the appropriate standard of care for PHWLV is the duty to use
reasonable care in servicing and inspecting the fire-suppression system, and
W e
in responding to issues arising from failures within the system.
therefore reverse the district court's judgment on the jury verdict and order
denying a new trial, vacate the district court's post-judgment orders
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awarding attorney fees and prejudgment interest, and remand for
proceedings consistent with this opinion.
BACKGROUND
PHWLV owns and operates the Planet Hollywood Resort and
Casino, a resort on the Las Vegas Strip. It also operates the Miracle Mile
Shops, a retail shopping mall adjacent to the resort. The mall leased space
to Chinese Laundry, a footwear retailer, and House of CB, a clothing
retailer. PHWLV maintained a fire-suppression system above the retailers'
stores and the rest of the mall.
Witnesses at trial testified to the following events: On July 8,
2017, a pressurized fire-suppression pipe separated from another pipe at its
coupling. Water escaped the system through that separation and flooded a
service corridor within Planet Hollywood before leaking into the resort and
mall. About two hours after the pipe separation, PHWLV's employees and
contractors were able to shut off the flow of water. The water caused
immense damage to the resort, mall, and the retailers' physical store space
and inventory.
The retailers sued PHWLV for negligence. After discovery, they
moved for partial summary judgment on their claims against PHWLV. The
district court granted the motion, finding that there was no genuine dispute
over the elements of duty or breach. It found "a legal duty imposed on
property owners to ensure that whatever is on a person's property does not
invade or otherwise damage the property of another." It also found that
PHWLV breached that duty, as the water on its property invaded and
damaged the retailers' property. The parties proceeded to a jury trial on
the elements of causation and damages. At the close of evidence, the
retailers moved for a directed verdict on the element of causation, which the
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district court granted. The jury decided only the extent of damages suffered
by the retailers. It awarded House of CB $3,133,755.56 and Chinese
Laundry $411,581.41. Thereafter, PHWLV moved for a new trial or,
alternatively, for remittitur of the jury award. The district court denied the
motion and entered judgment on the jury verdict. It also granted in part
House of CB's motion for attorney fees and prejudgment interest. PHWLV
appeals each of the district court's orders.
DISCUSSION
The district court erred in granting summary judgment to the retailers
PHWLV challenges the district court's award of partial
summary judgment to the retailers. It argues that the district court
imposed a strict-liability standard by improperly defining PHWLV's duty
and finding breach as a matter of law.
As an initial matter, the retailers argue that PHWLV failed to
assert these arguments before the district court. "A point not urged in the
trial court, unless it goes to the jurisdiction of that court, is deemed to have
been waived and will not be considered on appeal." Old Aztec Mine, Inc. v.
Brown, 97 Nev. 49, 52, 623 P.2d 981, 983 (1981). We conclude that PHWLV
did not waive its arguments with respect to the grant of partial summary
judgment. PHWLV opposed the retailers' motion for partial summary
judgment on the same substantive grounds that it pursues on appeal. It
also used the language of strict liability in its supplemental briefing.
Therefore, PHWLV adequately raised its arguments in the trial court such
that they are not waived on appeal.
We review the district court's decision to grant summary
judgment de novo. Wood v. Safeway, Inc.. 121 Nev. 724, 729, 121 P.3d 1026,
1029 (2005). "A claim for negligence in Nevada requires that the plaintiff
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satisfy four elements: (1) an existing duty of care, (2) breach, (3) legal
causation, and (4) damages." Turner v. Mandalay Sports Ent., LLC, 124
Nev. 213, 217, 180 P.3d 1172, 1175 (2008). In this case, we must consider
whether PHWLV owed a duty to the retailers, the scope of any such duty,
and whether PHWLV breached the duty owed to the retailers.
We begin with the first issue: whether PHWLV owed a duty to
the retailers. In doing so, we consider "whether 'such a relation exists
between the parties that the community will impose a legal obligation upon
one for the benefit of the other." Lee v. GNLV Corp., 117 Nev. 291, 295, 22
P.3d 209, 212 (2001) (quoting W. Page Keeton et al., Prosser and Keeton on
the Law of Torts, § 37, at 236 (5th ed. 1984)). We have adopted the principle
that "landowners bear a general duty of reasonable care to all entrants."
Foster v. Costco Wholesale Corp., 128 Nev. 773, 781, 291 P.3d 150, 156
(2012); see also Moody v. Manny's Auto Repair, 1.10 Nev. 320, 333, 871 P.2d
935, 943 (1994) (ID]eterminations of liability should primarily depend upon
whether the owner or occupier of land acted reasonably under the
circumstances.").
We hold that PHWLV and the retailers had such a relation that
the community imposes a legal obligation on PHWLV for the benefit of the
retailers. This is because PHWLV owned and occupied the land, while the
retailers were entrants on that land. PHWLV controlled the fire-
suppression system, the premises on which the system was located, and the
mall itself. The system under its control malfunctioned, creating a risk of
damage to the retailers in the mall. This approach accords with the modern
trend of defining a landowner's duty of reasonable care under the
circumstances. See Restatement (Third) of Torts: Phys. & Emot. Harm § 51
cmt. heading (Am. Law Inst. 2012) (stating that "a land possessor owes a
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duty of reasonable care to entrants on the land" regarding either its own
conduct or "artificial conditions on the land," when such conduct poses risk
to the entrants). Therefore, PHWLV owed a duty to exercise reasonable
care under the circumstances to the retailers.
Second, we must determine the scope of the duty that PHWLV
owed to the retailers. "The law is clear that if a legal duty exists, reasonable
care under the circumstances must be exercised." Lee, 117 Nev. at 296. 22
P.3d at 212. "The duty issue must be analyzed with regard to foreseeability
and gravity of harm, and the feasibility and availability of alternative
conduct that would have prevented the harm." Foster, 128 Nev. at 781, 291
P.3d at 156 (internal quotation marks omitted). PHWLV owed the retailers
the duty to exercise reasonable care under the circumstances. This duty
extends to multiple sets of circumstances. The duty extends to the
servicing, maintenance, and inspection of the fire-suppression system. The
duty extends to the implementation of procedures that govern failures
within the system, like a possible pipe separation. And the duty extends to
PHWLV's reaction to the pipe separation on July 8, 2017.
Because we limit the scope of PHWLV's duty to the use of
reasonable care, we conclude that the district court erred by describing
PHWLV's duty in absolute terms. Its formulation of PHWLV's duty lacks
the crucial principles underlying our negligence jurisprudence: either the
exercise of reasonable care or the consideration of the circumstances
necessitating reasonable care. Instead, the district court seemed to impose
strict liability on property owners to control what is on their property. An
absolute standard omits the inquiry as to whether the property owner
exercised reasonable care in their control of what is on their property. But
Nevada law requires such an inquiry. See id. We thus hold that PHWLV
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owed the duty to exercise reasonable care under the circumstances and that
the district court erred by expanding that duty.
Third, we cannot determine whether PHWLV exercised
reasonable care under the circumstances (i.e., whether it breached its duty).
This case-specific determination should be determined by the jury. See Lee,
117 Nev. at 296, 22 P.3d at 212 ("Whether a defendant's conduct was
reasonable under a given set of facts is generally an issue for the jury to
decide." (internal quotation marks omitted)). In so determining, the jury
must resolve two questions: first, whether PHWLV breached its duty of
reasonable care by not properly maintaining the system; and second,
whether PHWLV breached its duty when responding to the incident.
We conclude that the retailers were not entitled to partial
summary judgment under the district court's erroneous theory of PHWLV's
duty. As a result, we conclude that the district court erred in granting
partial summary judgment in favor of the retailers.
The district court's error marred the subsequent proceedings
The district court's error in granting partial summary judgment
to the retailers manifested itself throughout the remainder of the litigation.
As counsel for House of CB conceded at oral argument before this court, any
error in the district court's formulation of PHWLV's duty would
contaminate the trial proceedings and jury verdict.
For example, the district court granted the retailers' motion for
a directed verdict on the element of causation. But it found causation based
on the incorrect description of PHWLV's duty. It is clear the water that
escaped from PHWLV's fire-suppression system caused damage to the
retailers. However, as the parties did not have to address whether PHWLV
exercised reasonable care under the circumstances, causation became
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indisputable. Similarly, the jury found damages resulting from that
imposition of causation, and the district court awarded attorney fees
resulting from the jury verdict. When a negligence case is built upon an
incorrect formulation of the defendant's duty, everything that occurs
thereafter will necessarily be tainted. Based on the errors described above,
we reverse the district court's judgment and vacate the district court's post-
judgment order granting attorney fees and prejudgment interest.1
The district court erred by denying PHWLV's motion for a new trial
PHWLV argues that the district court erred by denying its
motion for a new trial pursuant to NRCP 59. We review a district court's
decision on a motion for a new trial for an abuse of discretion. Nelson v.
Heer, 123 Nev. 217, 223, 163 P.3d 420, 424-25 (2007). "While review for
abuse of discretion is ordinarily deferential, deference is not owed to legal
error." AA Primo Builders, LLC v. Washington, 126 Nev. 578, 589, 245 P.3d
1190, 1197 (2010). A district court may grant a new trial when an error in
law occurred at the trial and that error was objected to by the party making
the motion for the new trial. NRCP 59(a)(1)(G).
For the reasons we have stated above, the district court's error
in defining PHWLV's duty constituted an error in law. PHWLV objected to
that error during its opposition to the retailers' motions for summary
judgment and adequately demonstrated grounds for a new trial. Therefore,
we conclude that the district court erred denying PHWLV's motion for a
new trial and reverse its order.
'Given our conclusion, we need not address the issue of damages.
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PHWLV has not shown that reassignrnent is necessary
PHWLV requests that this case be transferred from the
assigned judge to a different judicial department upon remand.
Reassignment may be appropriate when a trial court, whether consciously
or unconsciously, "undermined [the] plaintiffs case and cannot fairly deal
with the matters involved." Wickliffe v. Sunrise Hosp., Inc., 104 Nev. 777,
783, 766 P.2d 1322, 1326 (1988). PHWLV argues that the assigned judge
undermined its case by making multiple adverse rulings against it. It also
argues that the assigned judge heard inadmissible or inappropriate
evidence regarding the retailers' damages calculations. But PHWLV does
not identify any specific evidence that the assigned judge heard that should
have been excluded. Nor does PHWLV explain how adverse rulings—all of
which seemingly flow from a single error regarding the scope of the duty
owed—constitute a display of partiality. As a result, we deny PHWLV's
request to reassign this case to a different judicial department.
CONCLUSION
The district court erroneously described the breadth of the duty
that PHWLV owed to the retailers. This error was compounded as the court
applied that duty to the other elements of negligence. We hold that PHWLV
owed the retailers the duty to use reasonable care, both in maintaining the
fire-suppression system and in responding to the events caused by the
system. Accordingly, we reverse the district court judgment on the jury
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verdict, reverse the district court order denying the motion for a new trial,
vacate the district court order awarding attorney fees and interest, and
remand this rnatter for a new trial.
J.
Herndo
We concur:
j.
Lee
J.
Bell
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