CARSON CITY — A Las Vegas man has won a partial victory in his decades-long fight with a California tax agency, but what was once a nearly $500 million verdict is now far, far less.
The Nevada Supreme Court this week upheld a jury verdict in favor of inventor and entrepreneur Gilbert Hyatt on claims of fraud and intentional infliction of emotional distress by the California Franchise Tax Board.
The court found the California agency was not immune in Nevada from bad faith conduct.
But in light of a U.S. Supreme Court decision, the Nevada Supreme Court said in the decision dated Thursday that the California agency is capped at $50,000 in damages — just as a Nevada agency would be in similar circumstances.
The $50,000 was applied to the fraud finding and separately to the emotional distress finding by the Clark County District Court jury.
The Supreme Court also determined that the California agency is entitled to immunity from punitive damages because they would not be available against a Nevada government entity. As a result, what was once a $250 million punitive damage award by the jury was reversed.
The case has been sent back to district court for a determination of appropriate attorneys fees and costs and interest on what is left in the once massive jury award.
The Franchise Tax Board audited Hyatt, who moved to Las Vegas in 1991, to determine if he had paid taxes on all of his income while a resident of California.
Hyatt sued the agency in Nevada, and was awarded $138 million on several causes of action, plus $250 million in punitive damages. He alleged fraud, invasion of privacy and other claims.
The Supreme Court decision resolves most of the issues in a case began in 1991, made two trips to the Nevada Supreme Court and two to the U.S. Supreme Court.
The Sacramento Bee reported on Aug. 30 that a California tax agency cut millions of dollars in taxes and penalties that had been levied against Hyatt. The paper reported that the Board of Equalization determined that Hyatt was actually a Nevada resident during most of the six-month period 26 years ago when state tax collectors say he lied about his residence to dodge California taxes.
Contact Sean Whaley at firstname.lastname@example.org or 775-461-3820. Follow @seanw801 on Twitter.