NRS 42.005 Damages

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NRS 42.005Exemplary and punitive damages: In general; limitations on amount of award; determination in subsequent proceeding.

      1.  Except as otherwise provided in NRS 42.007, in an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud or malice, express or implied, the plaintiff, in addition to the compensatory damages, may recover damages for the sake of example and by way of punishing the defendant. Except as otherwise provided in this section or by specific statute, an award of exemplary or punitive damages made pursuant to this section may not exceed:

      (a) Three times the amount of compensatory damages awarded to the plaintiff if the amount of compensatory damages is $100,000 or more; or

      (b) Three hundred thousand dollars if the amount of compensatory damages awarded to the plaintiff is less than $100,000.

      2.  The limitations on the amount of an award of exemplary or punitive damages prescribed in subsection 1 do not apply to an action brought against:

      (a) A manufacturer, distributor or seller of a defective product;

      (b) An insurer who acts in bad faith regarding its obligations to provide insurance coverage;

      (c) A person for violating a state or federal law prohibiting discriminatory housing practices, if the law provides for a remedy of exemplary or punitive damages in excess of the limitations prescribed in subsection 1;

      (d) A person for damages or an injury caused by the emission, disposal or spilling of a toxic, radioactive or hazardous material or waste; or

      (e) A person for defamation.

      3.  If punitive damages are claimed pursuant to this section, the trier of fact shall make a finding of whether such damages will be assessed. If such damages are to be assessed, a subsequent proceeding must be conducted before the same trier of fact to determine the amount of such damages to be assessed. The trier of fact shall make a finding of the amount to be assessed according to the provisions of this section. The findings required by this section, if made by a jury, must be made by special verdict along with any other required findings. The jury must not be instructed, or otherwise advised, of the limitations on the amount of an award of punitive damages prescribed in subsection 1.

      4.  Evidence of the financial condition of the defendant is not admissible for the purpose of determining the amount of punitive damages to be assessed until the commencement of the subsequent proceeding to determine the amount of exemplary or punitive damages to be assessed.

      5.  For the purposes of an action brought against an insurer who acts in bad faith regarding its obligations to provide insurance coverage, the definitions set forth in NRS 42.001 are not applicable and the corresponding provisions of the common law apply.

      (Added to NRS by 1989, 486; A 1995, 2669)

Nevada Revised Statutes (NRS) Chapter 42, Section 005

Plain English Explanation

Under Nevada law, if you sue someone in a case that isn’t based on a contract, like a typical personal injury or other wrongdoing, you can ask for more than just compensation for your actual losses when the defendant’s conduct was especially bad. To be eligible for these extra “punitive” or “exemplary” damages, you must prove by very clear evidence that the person acted with oppression, fraud, or malice. Meaning, they intentionally or recklessly hurt you or treated you badly enough that society should punish them as an example.

Once that higher level of wrongdoing is established, you can recover punitive damages on top of whatever money covers your real losses. However, Nevada caps how much punitive damage you can collect:

• If your compensatory award (the money for your actual harm) is at least $100,000, then the punitive award cannot exceed three times that compensatory amount.
• If your compensatory award is under $100,000, then punitive damages are limited to $300,000 total.

Those limits do not apply in certain types of cases. For example, lawsuits against someone who made or sold a defective product, claims involving drunk or drugged driving, or a few other special categories. In those situations, the caps are lifted so juries can set punitive damages as they see fit, based on the egregious behavior involved.

Finally, decisions about whether to award punitive damages and how much to award happen in a separate, follow-up phase after you’ve already won compensatory damages. That way, the court or jury considers your actual losses first and then turns to the question of punishment only if there’s clear, convincing proof the defendant’s conduct warrants it.

Overview of NRS 42.005

Nevada Revised Statute 42.005 governs the award of punitive damages (also called exemplary damages) in Nevada civil cases. This statute establishes specific guidelines for when punitive damages can be awarded and places limits on their amounts.

The statute serves three primary purposes:

1. Establishes the burden of proof for punitive damages
2. Sets caps on punitive damage awards
3. Creates a bifurcated trial process for punitive damage determinations

Recent data from the Nevada Judicial Branch indicates that punitive damages were awarded in approximately 8% of civil cases that went to trial in 2022, with an average award of $450,000 in Clark County.

Key elements of the statute

Burden of Proof

• Requires “clear and convincing evidence”
• Must prove oppression, fraud, or malice
• Higher standard than typical civil cases

Damage Caps

• 3x compensatory damages if compensatory damages are $100,000+
• $300,000 cap if compensatory damages are under $100,000
• Certain exceptions apply to these caps

Exceptions to Caps

• Defective product cases
• Bad faith insurance claims
• Discriminatory housing practices
• Toxic/hazardous material cases
• Defamation cases

Bifurcated Trial Process

• Initial determination of liability
• Separate proceeding for damage amount
• Same trier of fact for both phases

Practical application

Auto Accident Case Example

• Scenario: Drunk driver causes accident
• Compensatory damages: $50,000
• Maximum punitive damages: $300,000
• Total potential recovery: $350,000

Insurance Bad Faith Example

• Scenario: Insurance company wrongfully denies claim
• No cap applies
• Damages based on insurer’s conduct and financial condition

Medical Malpractice Case in Reno

• Scenario: Doctor’s gross negligence causes permanent injury
• Compensatory damages: $500,000
• Potential punitive damages: Up to $1.5 million (3x compensatory)
• Total potential recovery: $2 million

According to the Nevada Justice Association, punitive damages were awarded in 12% of medical malpractice cases that went to trial in Washoe County over the past two years.

Related case law

Bongiovi v. Sullivan, 122 Nev. 556 (2006)

• Clarified “clear and convincing” standard
• Emphasized need for malicious conduct

Rapid Cash v. Hoffman, 128 Nev. 314 (2012)

• Addressed bifurcated trial requirement
• Confirmed jury instruction requirements

Frequently asked questions about Exemplary and punitive damages: In general; limitations on amount of award; determination in subsequent proceeding (NRS 42.005)

What is needed to prove punitive damages in Nevada?

Clear and convincing evidence of oppression, fraud, or malice (NRS 42.005(1)).

Are there limits on punitive damages in Nevada?

Yes, generally 3x compensatory damages or $300,000, with exceptions (NRS 42.005(1))

Can insurance companies be sued for unlimited punitive damages?

Yes, insurance bad faith claims are exempt from damage caps (NRS 42.005(2)(b))

How does Nevada’s punitive damage law compare to other states?

Nevada’s law is more restrictive than some states but less than others. The 3x cap is common, but the $300,000 alternative is unique to Nevada.

Are punitive damages taxable in Nevada?

Generally, punitive damages are considered taxable income by the IRS. However, tax treatment can be complex, and it’s advisable to consult with a tax professional for specific cases.

Related statutes

NRS 42.001

• Definitions for Chapter 42
• Defines terms used in punitive damage cases

NRS 42.007

• Limitations on punitive damages against small businesses
• Complements main punitive damage statute

NRS 41.035

• Tort claim limitations against government entities
• Relates to damage limitations in civil cases

Understanding NRS 42.005 is crucial for anyone involved in a civil lawsuit in Nevada where punitive damages may be at play. If you’re facing such a situation, it’s essential to consult with a knowledgeable Nevada attorney who can guide you through the complexities of this law.